RTTNews - While the Institute for Supply Management - Chicago released a report on Friday showing a continued contraction in manufacturing activity in the month of July, the pace of contraction slowed by a little more than economists had been expecting.
The ISM - Chicago said its index of activity in the manufacturing sector rose to 43.4 in July from 39.9 in June, with a reading below 50 indicating a contraction in the sector. Economists had been expecting the index to come in at 43.0.
A slower pace of contraction in new orders contributed to the improvement in the sector, with the new orders index rising to 48.0 in July from 41.6 in June.
Employment also contracted at a slower pace compared to the previous month, as the employment index rose to 35.3 from 28.9.
At the same time, the report showed an acceleration in the pace of contraction in order backlog, with the order backlog index slipping to 32.1 in July from 37.6 in the previous month.
On the inflation front, the prices index fell to 35.0 in July from 36.3 in June, indicating a faster pace of contraction in prices.
Peter Boockvar, equity strategist at Miller Tabak said, Bottom line, the data confirms the backdrop for an improvement in GDP.
The degree and sustainability of the recovery will however remain in the hands of end demand, aka, predominantly the U.S. consumer, he added.
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