US Manufacturing Sector Shrank for Second Month
WASHINGTON -- U.S. manufacturing shrank for the second straight month in July, further evidence of an economy growing at a sluggish pace.
The Institute for Supply Management, a trade group of purchasing managers, said Wednesday that its index of manufacturing activity ticked up to 49.8, from 49.7 in June. A reading below 50 indicates contraction. June was the first time the survey showed manufacturing contracted in three years.
The reading points toward more slow growth but not another recession. The trade group says the index needs to fall below 43 to signal a recession is likely.
The July report also showed factories hired in at a slower pace than June, while new orders declined more slowly. And export orders fell to the lowest level since April 2009, evidence of slower global economic growth.
Manufacturing has been a key source of growth in the U.S. since the recession ended in June 2009. But in recent months, factory activity has weakened along with the broader economy. Job growth has slumped and U.S. consumers and businesses have cut back on spending, lowering demand for factory goods. Europe's economic woes and slower growth in China, India and Brazil have reduced demand for American exports.
The Labor Department will issue the July jobs report Friday. Economists forecast it will show that employers added only 100,000 jobs, according to a survey by FactSet. The unemployment rate will probably remain stuck at 8.2 percent.
|The real U6 rate will remain stuck around 15 percent.|
Posted by: Steve White