US ISM manufacturing index slips more than expected in July

Growth in the US economy’s manufacturing sector slipped more than expected in July, according to the US Institute for Supply Management (ISM).

The ISM index of national factory activity fell to 52.6 from a 16-month high of 53.2 the month before, missing economists’ expectations for a smaller drop down to 53.0.

The employment index fell 1 percentage point from June to 49.4, while the new orders index came in at 56.9 from 57.0 the month before. The 50 mark separates contraction from expansion.

The production index rose to 55.4 from 54.7, while the prices paid index slipped to 55.0 from 60.5.

Capital Economics said the data was consistent with a pick-up in GDP growth. “After last week’s disappointing second-quarter GDP data, the minor fall in the ISM manufacturing index...should soothe fears that the US economy is heading into a more serious downturn. Indeed, at its current level, the index remains consistent with a pick-up in GDP growth to around 2%.”