July 2024 Manufacturing ISM Report On Business Reports Manufacturing Sector Contracted for the Fourth Consecutive Month

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected. Economic activity in the manufacturing sector contracted in July for the fourth consecutive month and the 20th time in the last 21 months, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The U.S. manufacturing sector contracted for the fourth consecutive month in July, as the Manufacturing PMI registered 46.8 percent, down 1.7 percentage points compared to June’s reading of 48.5 percent. After breaking a 16-month streak of contraction by expanding in March, the manufacturing sector has contracted the last four months, and at a faster rate in July.

ISM’s New Orders Index contracted in July for the fourth consecutive month, registering 47.4 percent, a decrease of 1.9 percentage points compared to June’s figure of 49.3 percent. The New Orders Index hasn’t indicated consistent growth since a 24-month streak of expansion ended in May 2022.

The Production Index continued in contraction territory in July, registering 45.9 percent, 2.6 percentage points lower than the June reading of 48.5 percent. None of the six largest manufacturing sectors reported increased production. The index recorded its lowest performance since May 2020, when it registered 34.2 percent.

ISM’s Employment Index registered 43.4 percent in July, 5.9 percentage points lower than the June reading of 49.3 percent. The index recorded its lowest level since a reading of 42 percent in June 2020. The index contracted for the second consecutive month after an expansion in May, which broke a seven-month streak of contraction.

Delivery performance of suppliers to manufacturing organizations was slower in July, with the Supplier Deliveries Index registering 52.6 percent, a 2.8-percentage point gain compared to the reading of 49.8 percent reported in June. This is the first month of slower deliveries after four consecutive months of faster deliveries.

The Inventories Index registered 44.5 percent in July, down 0.9 percentage point compared to the reading of 45.4 percent reported in June. Manufacturing inventories contracted at a faster rate compared to the previous month.

ISM’s Backlog of Orders Index registered 41.7 percent, the same reading as in June, indicating order backlogs contracted for the 22nd consecutive month after a 27-month period of expansion. For the second consecutive month, the index recorded its lowest reading since November 2023, when it registered 39.3 percent.

The five manufacturing industries reporting growth in July are: Printing & Related Support Activities; Petroleum & Coal Products; Miscellaneous Manufacturing; Furniture & Related Products; and Nonmetallic Mineral Products. The 11 industries reporting contraction in July — in the following order — are: Primary Metals; Plastics & Rubber Products; Machinery; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; Food, Beverage & Tobacco Products; Wood Products; Paper Products; Chemical Products; and Computer & Electronic Products.