Manufacturing growth is showing signs of moderating and a further slowdown seems likely, based on subcomponent of a key survey, but the engine that has powered economic growth over the last three quarters is not set to peter out any time soon.
The ISM Manufacturing Index, a closely-followed survey that looks at companies that produce durable and non-durable items, fell from 56.2 in June to 55.5 in July, but the survey is holding above 50, which marks the line between expansion and contraction.
New orders, which looks toward the future, fell 5 points to 53.5 and production slowed by 4.4 points to a still-healthy 57.0.
Good news on the jobs front: employment inched up to 58.6, which indicates manufacturers remain optimistic going forward.
Meanwhile, prices paid edged up a half point to 57.0 and is well off the peak of 78 earlier in the year. The economic slowdown appears to have dampened growth and leaned on commodity prices. The bump in the dollar is also helping on the inflation front.
On the flip side, the lack of pricing power early in the pipeline also highlights that fragile nature of the recovery.
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