Economic activity in the manufacturing sector contracted for the
second straight month in July, according to the Institute for
Supply Management's survey. PMI registered 49.8 percent last month,
slightly below expectations. A reading below 50 percent indicates
that the manufacturing economy is generally contracting.
PMI had shown 34 consecutive months of expansion until June,
when it fell to 49.7%.
The internals of the report weren't much better. New Orders
improved slightly but registered just 48.0. Prior to June's sub-50
reading, New Orders were above 50 every month since May 2009 - when
the economy was just emerging from the Great Recession.
Although this report was slightly better overall than the June
survey, it once again showed contraction in the manufacturing
economy. However, a reading below 50 does not necessarily signal
that a recession is looming. Recessions typically register PMI
readings in the low 40's, and we're still above those levels. But
this does add to the list of data that suggests the economy is
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