U.S. Manufacturing PMI Falls to 46.8% in July 2024 ISM Report

The Institute for Supply Management (ISM) released its Manufacturing Report On Business for July 2024, revealing a continued contraction in the U.S. manufacturing sector. The Manufacturing Purchasing Managers’ Index (PMI) registered at 46.8%, down 1.7 percentage points from the previous month’s reading of 48.5%.

This data signifies a fourth consecutive month of contraction for the manufacturing sector. Notably, only one of the five sub-indices that directly contribute to the Manufacturing PMI, Supplier Deliveries, indicated expansion. Conversely, the New Orders Index remained in contraction territory and experienced a downward trend in July.

The ISM report underscores a challenging environment for U.S. manufacturers. A combination of factors, including weakening demand, supply chain disruptions, and inflationary pressures, has contributed to the sector’s contraction. The decline in new orders is particularly concerning, suggesting a slowdown in future economic activity.

While the Supplier Deliveries index registered expansion, indicating improving supplier performance, it was the sole bright spot in an otherwise gloomy report. The remaining sub-indices, including production, employment, and customer inventories, all contracted during the month.

The manufacturing sector’s performance has significant implications for the overall economy. As a key component of GDP, manufacturing contractions can dampen economic growth. Consequently, policymakers and businesses will closely monitor the manufacturing sector’s trajectory for insights into the broader economic outlook.