July 2023 Manufacturing ISM Report On Business Reports Another Month of Employment Contraction

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector contracted in July for the ninth consecutive month following a 28-month period of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The U.S. manufacturing sector contracted in July, as the Manufacturing PMI registered 46.4 percent, 0.4 percentage point higher than the reading of 46 percent recorded in June. This is the ninth month of contraction and continuation of a downward trend that began in June 2022.

ISM’s New Orders Index contracted for the 11th consecutive month in July, registering 47.3 percent, an increase of 1.7 percentage points compared to June’s reading of 45.6 percent.

The Production Index registered 48.3 percent in July, 1.6 percentage points higher than the June reading of 46.7 percent, contracting for the second straight month after one month of expansion preceded by five consecutive months in contraction.

ISM’s Employment Index registered 44.4 percent in July, 3.7 percentage points lower than the June reading of 48.1 percent. The index indicated employment contracted for a second month after two months of expansion preceded by two months of contraction.

The delivery performance of suppliers to manufacturing organizations improved for the 10th straight month in July, as the Supplier Deliveries Index registered 46.1 percent, 0.4 percentage point higher than the 45.7 percent reported in June.

The Inventories Index registered 46.1 percent in July, 2.1 percentage points higher than the 44 percent reported for June. Manufacturing inventories contracted at a slower rate compared to June.

ISM’s Backlog of Orders Index registered 42.8 percent, a 4.1-percentage point increase compared to June’s reading of 38.7 percent, indicating order backlogs contracted for the 10th consecutive month (though at a slower rate in July) after a 27-month period of expansion.

The two manufacturing industries that reported growth in July are: Petroleum & Coal Products; and Furniture & Related Products. The 16 industries reporting contraction in July, in the following order, are: Apparel, Leather & Allied Products; Plastics & Rubber Products; Paper Products; Textile Mills; Wood Products; Computer & Electronic Products; Chemical Products; Primary Metals; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Printing & Related Support Activities; Miscellaneous Manufacturing; Fabricated Metal Products; Transportation Equipment; Nonmetallic Mineral Products; and Machinery.