The overall economy grew for the third straight month while the manufacturing sector contracted for the 18th month in a row, the Institute for Supply Management reported yesterday.
According to the ISM’s monthly report on business, the ISM index gained to 48.9 in July from 44.8 in June.
Economists polled by Thomson Reuters predicted the index would rise to 46.2.
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 decline in manufacturing was slower in July when compared to June, as the more leading components of the PMI — the new orders and production indexes — rose significantly above 50%, thus setting an expectation for future growth in the sector,” said Norbert J. Ore, chairman of the institute’s manufacturing business survey committee.
“The employment and inventories indexes are still contracting, but the rate is slowing and they are moving in the right direction. It is also worth noting that the new export orders index shows growth following nine consecutive months of decline, suggesting that the global economy is recovering. Overall, it would be difficult to convince many manufacturers that we are on the brink of recovery, but the data suggests that we will see growth in the third quarter if the trends continue.”