Business activity slowed in July for member manufacturers and distributors, according to the latest Economic Indicators Report from the Industrial Supply Association.

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Manufacturer activity in July was at 60.42 percent compared to 59.44 percent the previous month. The distributor index registered 63.53 percent, compared to 60.19 percent in June.

For each index, a reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

Both numbers are higher than the Institute for Supply Management’s PMI of 49.8 for the month of July and the Markit U.S. Manufacturing Purchasing Managers Index of 51.4.

The eroding economic situation in Europe and the weakening manufacturing conditions in China are having an effect on the U.S., said John Buckley, ISA executive vice president. The domestic purchasing manager’s index published by ISM declined for two consecutive months for the first time since 2009, indicating business in the U.S. is slowing. While the industrial supply industry has done pretty well for the past few years, there is growing concern for the remainder of 2012.

Download the complete report from the ISA website.