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Thursday, July 1, 2010

ISM Manufacturing Index Falls 3.5 Point to 56.2

In June, the Institute for Supply Management's Manufacturing Index fell back for a second straight month, declining 3.5 point to 56.2. Despite the drop, the index remains well above the expansionary threshold of 50. However, this is the lowest level since last December. Manufacturing activity in continuing to expand; however, it is becoming evident that the recovery in this sector is decelerating. If the July index number proves to be a third consecutive decline, it would cause some concern regarding the strength of the overall economic recovery.

The decline in the index was generally broad based across its component parts. The production component fell 5.2 points to 61.4, while the employment index fell 2.0 points to 57.8. As a forward looking indicator of future production, the new orders component fell heavily by 7.2 points to 58.5, the lowest level since October 2009. In addition, the export order subcategory fell by 6.0 points suggesting the fallout from Europe may be affecting foreign demand.

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