Economic activity in the manufacturing sector declined for the 12th consecutive month in July while the overall economy grew modestly during the month, say the nation's purchasing and supply management executives in the latest Manufacturing NAPM Report On Businessﾮ.
'The manufacturing sector continued to decline in July as has been the trend since August 2000,' said Norbert J. Ore, C.P.M., chair of the National Association of Purchasing Management's Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. 'The rate of decline accelerated during the month as new orders softened somewhat from June and inventory liquidation accelerated. Manufacturers continue to reduce payrolls and capital expenditures in cost cutting efforts. Though the Prices Index appears positive as most manufacturers are enjoying lower raw material costs, but it is also indicative of deteriorating pricing power for their finished goods.'
NAPM's Backlog of Orders Index indicates that order backlogs declined for the 15th consecutive month. NAPM's Supplier Deliveries Index continues to reflect faster deliveries. Manufacturing employment declined in July as the index fell below the breakeven point (an index of 50 percent) for the 10th consecutive month. NAPM's Prices Index remained below 50 percent as manufacturers experienced lower prices for the fifth consecutive month after 22 months of paying higher prices. New Export Orders failed to grow in July for the fourth consecutive month. July's Imports Index failed to grow for the seventh consecutive month. Comments from purchasing and supply managers this month reflect a sense of relief with regard to energy prices, but the two most used words were 'slow' and 'flat.' There were a few respondents expressing a sense of optimism and they were from construction-related industries.
NAPM's Purchasing Managers' Index is 43.6 percent in July, a decrease of 1.1 percentage points from the 44.7 percent reported in June.