NEW YORK (AP) — The U.S. manufacturing sector grew for the sixth consecutive month in July but expansion was the slowest since March, a survey said yesterday, indicating that the economy is plodding along at a tepid pace.
The Institute for Supply Management said its manufacturing index, which reflects the opinions of purchasing managers at factories, plants and utilities, registered 53.8 in July, down from 56.0 in June.
Wall Street expected the manufacturing index to remain unchanged from June, according to the consensus estimate of Wall Street economists polled by Thomson/IFR.
A reading above 50 indicates growth while a reading below 50 indicates contraction.
"Taken with some of the other indicators we saw today, the overall impression is the economy is continuing to muddle along, with growth a little bit below its longer-term average, but it's not veering into the ditch," said Douglas Porter, senior economist at Nesbitt Burns Securities of Chicago.
New orders and production led growth, while inventories continued to contract, as they have for the past year, according to the report.
Still, new orders and production were slightly weaker in July than in June. The index for new orders registered 57.5 in July, down from 60.3 the previous month, while the reading for production was 55.6 in July versus 62.9 in June.
The top performing industries, in order, were wood products; furniture and related products; food, beverage and tobacco products; miscellaneous manufacturing; paper products; textile mills; chemical products; computer and electronic products; nonmetallic mineral products, and primary metals.
In other economic news, the National Association of Realtors reported yesterday that pending sales of existing homes rose 5 percent in June from a month earlier, marking the largest monthly gain in more than three years. But the Mortgage Bankers Association said its index of home loan applications slipped last week for the second straight week.
The stock market, concerned about problems in the subprime mortgage market — which includes loans made to people with shaky repayment histories — and other credit worries, remained volatile.
The ISM report showed prices still advancing, with a reading of 65.0 in July compared with 68.0 in June.
"Upward pricing pressures now in their seventh month continue to be a major concern for supply managers," said Norbert J. Ore, chair of the institute's survey committee.
That concern was magnified yesterday as oil prices hit a new record, reaching $78.77 a barrel in New York trading.
Factory growth should continue at a moderate pace for the balance of the year, said Cliff Waldman, economist for the Manufacturers Alliance/MAPI, a trade group. He cautioned that the housing downturn could hurt already weak business equipment demand, while weaker economies in Canada and Mexico could hurt exports to those markets.