US ISM Manufacturing PMI slipped further to 48.0 in July, down from 49.0 and missing expectations of 49.6. This marks the fifth straight month of contraction in factory activity.
While production rose slightly from 50.3 to 51.4 and new orders improved from 46.4 to 47.1, both remained in contractionary territory.
Employment was a particular weak spot, with the sub-index dropping from 45.0 to 43.4—its lowest since the start of the year and the sixth consecutive month of contraction.
The share of manufacturing GDP in contraction jumped sharply, with 79% now shrinking in July versus 46% the month prior. A full 31% is deemed to be “strongly contracting,” suggesting growing stress across the sector.
Input costs also eased, with the prices index falling notably from 69.7 to 64.8.
Despite the weak PMI headline, ISM noted the historical correlation still points to modest growth in the broader economy, equating to roughly 1.6% annualized GDP growth. But signs of deeper employment cuts and broadening factory weakness raise concerns about the resilience of the industrial economy in H2.
