Tuesday, August 2, 2011

Manufacturing growth hits lowest level in 2 years

Manufacturing activity barely grew in July, falling to the weakest level since just after the recession ended.

The Institute for Supply Management, a trade group of purchasing executives, said Monday that its index of manufacturing activity fell to 50.9 percent in July from 55.3 percent in June.

It was the 23rd straight month of growth. But the reading was the lowest reading since July 2009 — one month after the recession officially ended. Any level above 50 indicates growth.

New orders shrank for the first time since the recession ended. Companies slashed their inventories after building them up in June. Output, employment, and prices paid my manufacturers all grew more slowly in July.

The disappointing report on manufacturing is the first major report on how economy performed in July. It suggests the dismal economic growth in the first half of the year could extend into the July-September quarter.

"The ISM manufacturing report for July is a shocker and strongly suggests that the disappointing performance of the economy in the first half of the year was not just temporary," said Paul Dales, a senior U.S. economist for Capital Economics. (more)