US manufacturing improves in July, future clouded by virus

U.S. manufacturing showed further improvement in July with a key gauge of activity rising further into expansion territory

WASHINGTON -- U.S. manufacturing improved again in July with a key gauge of activity rising further into expansion territory.

The Institute for Supply Management, an association of purchasing managers, said Monday that its manufacturing index rose to 54.2 last month, up from a June reading of 52.6. Any reading above 50 signas that U.S. manufacturing is expanding.

While it was the second straight month that the index has been above the 50 threshold, indicating manufacturing is expanding again, economists cautioned that the outlook is clouded by spreading infections in the U.S. in the South, West and Midwest.

“Manufacturing is recovering from low levels and the outlook is uncertain, given the threat of repeated disruptions from virus outbreaks,” said Rubeela Farooqi, chief U.S. economist at High Frequency Economics.

Timothy Fiore, chair of the ISM manufacturing survey committee, said it was encouraging that positive comments from survey participants were running two to one ahead of more cautious comments.

The index tracking new orders posted a strong gain of 5.1-percentage points from the June reading while the production index was up 4.8 percentage points. The orders backlog index was also up.

Of 18 manufacturing industries, 13 reported growth in July led by wood products and furniture and related products. The three industries reporting contractions in July were transportation equipment, machinery and fabricated metal products.