ISM mfr’g in July remained below 50 for a 2nd straight month at 49.8 vs expectations of 50.2 and 49.7 in June. New Orders rose a slight .2 pts to 48 but Backlogs were lower by 1.5 pts to 43, the 2nd lowest level since April ’09. Employment fell 4.6 pts to 52, the lowest since Dec ’09. Inventories at the mfr’g level rose 5 pts but remained below 50 for a 4th month and Customer Inventories were up by 1 pt to 49.5. Importantly, Export Orders fell 1 pt to 46.5, the weakest since April ’09. Prices Paid rose 2.5 pts off the lowest level since April ’09. Of the 18 industries surveyed, just 7 saw growth with the balance seeing contraction. The ISM concluded the report by saying “A growing number of comments from the panel this month reflect a slowdown in their businesses and general concern over increasing economic uncertainty.” Bottom line, with a contraction in mfr’g for a 2nd straight month, it begs the question of whether a recession for the broader economy is next. We’ll see the ISM services index on Friday which may give some clues as it makes up a vast majority of US economic activity.
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