The rallying automotive sector took a breather in July and that was the biggest reason for the Chicago Fed Midwest Manufacturing Index to drop 0.1% to 95.8. The slight decrease followed a 0.4% increase in June.

The auto sector decreased 0.4% in July, while the machinery sector in the region moved down 0.3%. The steel industry in the region saw production rise 1.5% while the resource sector was unchanged for the month.

Compared to July 2012, production in the region was up 1.6% for the month and nationally, output increased 1.5%.

Yesterday, the Federal Reserve Bank of Dallas reported that Texas manufacturing activity was slowing in August. The production index remained positive but fell from 11.4 to 7.3. Also showing continued growth, but at a slower rate, were new orders index (10.8 to 5.4), the shipments indext (17.7 to 11.4) and the capacity utilization index (12.2 to 4.6).

Texas manufacturers increased hiring, as the employment index rose 2 points to 11.2, but the hours worked index fell sharply from 1.3 to -9.9.

Manufacturers in the state remained optimistic as the indexes for both future general business activity and company outlook picked up from July.

Last week, manufacturers in the Philadephia Fed region also reported an expansion of activity in August, though at a slower rate. The diffusion index of current activity, the survey’s broadest measure of manufacturing conditions, was positive for the third consecutive month, but slipped from 19.8 in July to 9.3 for August.