|
Purchasing index down
|
 |
August 3, 1998: 11:27 a.m. ET
NAPM's monthly survey shows 0.5% dip as manufacturing sector contracts
|
NEW YORK (CNNfn) - America's manufacturing sector contracted for the second month in a row in July after growing steadily for 22 straight months, the National Association of Purchasing Management said Monday.
The purchasing managers' index, a broad gauge of overall activity in the nation's manufacturing industries, slipped to 49.1 in July, a 0.5 point dip from July's 49.6 level.
An index number above 50 generally indicates the economy is expanding, whereas anything below 50 points to contraction. The data are based on replies to survey questionnaires by purchasing executives in more than 350 industrial companies.
The bond market held relatively steady after the report, as the 30-year benchmark Treasury traded up 10/32 in price, with the yield at 5.69 percent.
Despite the production slump, the new orders index grew 1.2 percent in July to 53.2 percent, while the purchasing managers' index of backlog orders decreased slightly from June, to 44.5 percent. Another key barometer including in the composite index -- the production index -- fell 1.5 percentage points from 50.7 percent in June to 49.2 in July.
"The overall picture in July is one of slow- paced decline in manufacturing activity," said Norbert Ore, the chairman of the NAPM's Business Survey Committee and a director at Chesapeake Corp. "New orders are growing at a slightly faster rate. Deliveries of commodities were slower, but don't appear to present any problems."
A large number of respondents said the General Motors strike had influenced their purchasing decisions in July.
Of 183 respondents, 26 percent said their organizations supply goods to the automotive industry. Of those, nearly half said their production had been curtailed to some extent by the nearly two-month strike.
Ore said the average PMI rate for the period from January through July -- 51.9 percent --corresponds to a 2.9 percent increase in real gross domestic product. However, Ore added, if the July rate of 49.1 percent turns out to be the annual average for 1998, GDP would register only a 1.9 percent increase.
Only two industries -- furniture and food -- reported a higher rate of backlog orders in July over June. The NAPM inventories index rose to 43.7 percent in July from 40.8 percent in June, with paper and fabricated metals businesses reporting higher inventories in July from June.
Manufacturing employment declined more rapidly in July, with the index falling to 44.4 percent from the prior month' 47.8 percent. The four industries reporting growth in employment were furniture, food, textiles and paper.
In another economic report, U.S. construction spending grew 1.7 percent in June from a revised May drop of 1.9 percent. The increase was the largest since a 2.7 percent gain in February 1997. 
|
|
|
|
|
 |
|
