US manufacturing activity expands for 12th straight month

| August 2, 2010 | 0 Comments
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The Institute for Supply Management’s (ISM’s) purchasing managers index (PMI) today revealed the US manufacturing sector expanded for the 12th month in a row in July.

The growth was better than the 54.2 analysts had forecast with the index dipping to 55.5 in July from 56.2 the previous month.

However, while any reading above 50 indicates growth within the sector, it was the lowest so far in 2010.

Meanwhile, the new orders index plunged to 53.5 in July, down 5 notches from June and way below May’s reading of 65 - suggesting weaker manufacturing in the latter half of 2010.

A slowdown in manufacturing, as well as higher unemployment, have sparked fears of a “double-dip” recession in the US.

Commenting on the figures, Nigel Gault, chief US economist with IHS Global Insight, in Lexington, Massachusetts, said: “While manufacturing may be slowing, we haven’t gone off a cliff.

“The question is, are we going to stabilise or fall into a double dip? In that context, these numbers are encouraging,” he added.

In related news today, the euro zone’s manufacturing PMI rose to 56.7 in July from 55.6 in June, led by Germany and Italy.

In the UK, the CIPS/Markit manufacturing PMI revealed manufacturing activity slowed further in July.

The closely-watched CIPS/Markit manufacturing PMI dipped slightly from 57.6 in June to 57.3 in July.

However, the reading exceeded forecasts of 57.0 and is still close to May’s 15-year high of 58.1.

Meanwhile, there was worrying news for China after one survey revealed a contraction in manufacturing activity. The HSBC China PMI fell to 49.4 in July from 50.4 in June.

As a result, manufacturing contracted for the first time in 16 months.

However, a separate survey released by the China Federation of Logistics and Purchasing showed manufacturing activity eased to 51.2 in July from 52.1 in June.

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