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News > Economy
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Manufacturing activity slips
Sector grew in July, but just slightly, according to ISM report.
August 1, 2002: 10:28 AM EDT

NEW YORK (CNN/Money) - Manufacturing activity in the United States grew at a much slower pace in July, the nation's purchasing managers said Thursday, the sixth straight month of expansion following a long slump in the industry.

The Institute for Supply Management (ISM) said its key gauge of manufacturing activity fell to 50.5 in July from 56.2 in June. Any reading over 50 indicates expansion, but economists expected a reading of 55.0, according to Briefing.com.

Stocks headed lower in morning trading Thursday following the report and disappointing earnings news from Dow component ExxonMobil.

"For manufacturing, July was only slightly better than June. The PMI declined, but still indicated growth as 12 industries reported improvement in July," survey committee Chairman Norbert Ore said. "The decline in the PMI was primarily driven by a weak showing in July's new orders, which may be due to a pause in inventory replenishment."

Separately Thursday, the Commerce Department said June construction spending declined 2.2 percent to an annual rate of $820.8 billion, compared with a revised 2 percent decline in May.

The ISM index was below 50 for 18 straight months between 2000 and 2001, as the industry fell into a prolonged slump following a boom in business spending at the end of the 1990s. When businesses stopped spending, production shut down and more than 1.5 million jobs were cut, triggering a recession in the broader economy.

For this reason, Federal Reserve Chairman Alan Greenspan and other economists believe business spending will be key to the broader economy's recovery, and continuing growth in the ISM index raises hope that spending is on the mend.

The ISM's production index fell to 55.7 percent from 61.4 percent in June. Its new orders index fell to 50.4 percent from 63.1 percent. And its employment index fell to 45 percent from 49.7 in June.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.