ISM Manufacturing Index Inches Closer to Growth in July

The week begins on an optimistic note as nearly half of all manufacturing executives reported growth in July, according to a key industry survey.

The ISM Manufacturing Index improved to 48.9 in July, jumping more than 4 points from the June score and marking the fourth straight improvement. This indicates that overall conditions remain in contraction for the 18th consecutive month, but that the slowdown is stabilizing.

Forecasters were looking for a score of 46.5 and the jump was the biggest since September 2005, so markets easily expanded on prior gains after the release.

Leading the improvement was a 55.3 score in New Orders and a 57.9 score in Production, both of which point to expansion in the coming months. Employment remained in contraction for the 12th straight month, but the component climbed 4.9 points to 45.6 in  the month, which is better than expectations.

“It is also worth noting that the New Export Orders Index shows growth following nine consecutive months of decline, suggesting that the global economy is recovering,” said Norbert J. Ore, chairman of the ISM’s survey committee.

His comment is backed by comparable data from the international scene: China's manufacturing index inched up 1.6 points to 52.8 in July; manufacturing conditions in the UK expanded by 3.4 points to 50.8 â€