The overall economy grew for the fiftieth straight time, while the manufacturing sector expanded for the second consecutive month, the Institute for Supply Management reported Thursday.

According to the ISM's monthly report on business, the ISM index climbed to 55.4 in July from 50.9 in June.

Economists polled by Thomson Reuters predicted the index would rise to 52.0.

An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.

"The PMI registered 55.4 percent, an increase of 4.5 percentage points from June's reading of 50.9 percent," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. "June's PMI reading, the highest of the year, indicates expansion in the manufacturing sector for the second consecutive month. The New Orders Index increased in July by 6.4 percentage points to 58.3 percent, and the Production Index increased by 11.6 percentage points to 65 percent. The Employment Index registered 54.4 percent, an increase of 5.7 percentage points compared to June's reading of 48.7 percent. The Prices Index registered 49 percent, decreasing 3.5 percentage points from June, indicating that overall raw materials prices decreased from last month. Comments from the panel generally indicate stable demand and slowly improving business conditions."

The prices paid index decreased to 49.0 from 52.5. The employment index jumped to 54.4 from 48.7 the prior month.

The production index surged to 65.0 from 53.4, the new orders index rose to 58.3 from 51.9; the supplier deliveries index grew to 52.1 from 50.0; the export orders index dipped to 53.5 from 54.5; and the imports index rose to 57.5 from 56.0.

The inventories index fell to 47.0 from 50.5; the customers' inventories index gained to 47.5 from 45.0; and backlog of orders dropped to 45.0 from 46.5.

Respondents' comments included:

"Business conditions remain stable, possibly improving somewhat in future months." (Miscellaneous Manufacturing)

"Housing market continues to improve, leading to increased demand in product." (Electrical Equipment, Appliances & Components)

"Overall conditions remain steady and slightly above prior year." (Paper Products)

"Sales are holding steady. Business is good." (Furniture & Related Products)

"Business is slow compared to previous years." (Computer & Electronic Products)

"First half [of 2013] is better than last year - steady, slow improvement." (Printing & Related Support Activities)

"Leading indicators continue to show stagnant-to-gradual improvement, and sales across the board continue to be flat." (Machinery)

"Economy continues to be relatively flat. Growth in China is holding. Europe staying at a low level, and U.S. just flat." (Transportation Equipment)

"We see gluten-free industry to be strong and it continues to grow. We also see the need for capacity in blending operations." (Food, Beverage & Tobacco Products)

"Business remains flat. Looking for some seasonal bump as we come to the beginning of our 'busy' time." (Chemical Products)

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