Propelled by rising orders and increased production, the manufacturing sector of the U.S. economy grew for the second consecutive month in July, according to data released Aug. 1 by the Institute for Supply Management (ISM), Tempe, Ariz. The group's manufacturing index was at 56.6% last month, up 2.8 percentage points from June's 53.8% mark. A figure above 50% indicates the manufacturing sector is expanding; a number below 50% signals it is contracting.
New orders for manufactured goods grew faster in July, gaining 3.4 percentage points from June to reach 60.6%. Production did even better in percentage terms, rising 5.6 points to 61.2%.
Employment, which had been contracting, began expanding among manufacturers in July, according to ISM's data. Its manufacturing employment index rose to 53.2% in July from 49.9% in June.
Notable as well was a turnaround in the prices manufacturers pay. That part of the overall manufacturing index fell to 48.5% in July from 50.5% in June, signaling a shift from increasing prices to decreasing prices and indicating that "pricing power, at least for the short term, is once again favoring buyers," says Norbert J. Ore, chair of ISM's manufacturing business survey committee.