US manufacturing contracts sharply in July

Washington: US manufacturing activity contracted more sharply than expected last month, according to industry survey data published Thursday, deepening a recent slump on continued weak demand and falling output.

The Institute for Supply Management's (ISM) manufacturing index was 46.8 percent in July, down 1.7 percentage points from a month earlier.

This was well below market expectations of 48.0 percent, according to Briefing.com, and marked the fourth consecutive month where the reading was below the 50-point mark separating expansion from contraction.


The news that the US manufacturing contraction has deepened will likely bolster the case made by Federal Reserve Chair Jerome Powell on Wednesday that the US central bank could make its first interest rate cut "as soon as" September if the data continues to point in the right direction.

"US manufacturing activity entered deeper into contraction," ISM survey chief Timothy Fiore said in a statement. "Demand was weak again, output declined and inputs stayed generally accommodative."

Demand was subdued, he explained, "as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and other conditions."

Only five manufacturing industries reported growth last month -- including petroleum and coal products, and furniture -- down from eight a month earlier, while 11 industries contracted, the ISM said.