US July manufacturing activity grows; apparel in highest growth sector

Economic activity in the US manufacturing sector expanded in July, with the overall economy achieving a 26th consecutive month of growth, the nation's supply executives said in the latest Manufacturing ISM Report on Business released by the Institute for Supply Management (ISM). Eleven manufacturing industries reported growth in July, with apparel, leather and allied products reporting the highest growth.

Textile mills reported the eighth highest growth among the 11.

New orders contracted, production and backlogs grew and exports and imports grew. Supplier deliveries slowed at a slower rate, raw material inventories grew and prices too increased at a slower rate in the month.

The new export orders index reading of 52.6 per cent was up by 1.9 percentage points compared to June's figure of 50.7 per cent. The imports index grew again in July, up by 3.7 percentage points to 54.4 per cent from 50.7 per cent in June.

"The July manufacturing PMI [purchasing managers’ index] registered 52.8 per cent, down 0.2 percentage point from the reading of 53 per cent in June. This figure indicates expansion in the overall economy for the 26th month in a row after a contraction in April and May 2020. This is the lowest manufacturing PMI figure since June 2020, when it registered 52.4 per cent,” ISM Manufacturing Business Survey Committee chair Timothy R Fiore said in a release.

The new orders index registered 48 per cent—1.2 percentage points lower than the 49.2 per cent recorded in June. The production index reading of 53.5 per cent is a 1.4-percentage point decrease compared to June's 54.9 per cent. And the prices index registered 60 per cent—down by 18.5 percentage points compared to the June figure of 78.5 per cent. This is the index's lowest reading since August 2020 (59.5 per cent).

The backlog of orders index registered 51.3 per cent, 1.9 percentage points below June’s 53.2 per cent. The supplier deliveries index reading of 55.2 per cent is 2.1 percentage points lower than the June figure of 57.3 per cent. And the inventories index registered 57.3 per cent, 1.3 percentage points higher than the June reading of 56 per cent.

Panelists are now expressing concern about a softening in the economy, as new order rates contracted for the second month amid developing anxiety about excess inventory in the supply chain.