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July manufacturing slows, but remains positive

By Sonja Ryst
U.S. manufacturing businesses grew more slowly in July but kept up their positive momentum.

The Institute for Supply Management said Monday that its index of manufacturing industries amounted to 55.5 last month, growing at a 0.7 percent lower rate than in June. But the index expanded in July for the 12th consecutive month.

Any reading above 50 suggests growth. "Indications are that demand is still quite strong," the ISM report said.

The ISM's Employment Index, which measures growth in manufacturing employment, registered 58.6 percent in July, up 0.8 percent from June, and marked the eighth consecutive month of expansion. An Employment Index above 49.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics' data on manufacturing employment, the ISM said.

"If employment can start to improve, consumer spending will do better, and that'll get the whole economy going again," said Michael Moran, chief economist at New York-based Daiwa Capital Markets America Inc.

Traders and investors are keeping a close eye on economic indicators to see what lies ahead for the recovery. Gross domestic product, the broadest measure of economic activity, has been middling in recent months. The GDP grew at a 2.4 percent annual rate in the April-through-June period, the government said Friday, down from 5 percent at the end of 2009 and 3.7 percent at the beginning of this year.

By Sonja Ryst  |  August 2, 2010; 3:50 PM ET
Categories:  U.S. Economy  
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