The Institute for Supply Management reported U.S. manufacturing activity decreased for the fourth straight month in July, and contracted for the 20th time in the past 21 months. Among the trends highlighted in its July report, ISM found manufacturing demand is slowing, and manufacturing output is declining.
The overall economy continued to expand July, ISM noted, with only one month of contraction (April 2020) recorded in the past 51 months.
The ISM’s monthly Purchasing Managers Index (PMI) is based on surveys of supply-chain managers and uses a series of indexes to measure changes in U.S. manufacturing activity across 19 industrial sectors.
The manufacturing PMI for July was recorded at 46.8 percent, down 1.7 percentage points from the 48.5 percent recorded for June.
"U.S. manufacturing activity entered deeper into contraction. Demand was weak again, output declined, and inputs stayed generally accommodative,” wrote Timothy R. Fiore, chairman of ISM Manufacturing Business Survey Committee.
According to one response sampled by ISM from a contributor in the Machinery sector: "It seems that the economy is slowing down significantly. The number of sales calls received from new suppliers is increasing significantly. Our own order backlog is also diminishing. We are hoping for an increase in customer demand, or we will possibly need to make organizational changes."
Another respondent, in the Fabricated Metal Products sector, remarked: "Unfortunately, our business is experiencing the sharpest decline in order levels in a year. We were well below our budget target in June; as a result; it was the first month this year that we had negative net income."
According to Fiore: "Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and other conditions.
“Production execution was down compared to June, likely adding to revenue declines, putting additional pressure on profitability. Suppliers continue to have capacity, with lead times improving and shortages not as severe.”
