The growth of the United States manufacturing sector slowed in July and construction spending fell for the second consecutive month, according to reports issued Thursday.
The Institute for Supply Management said its index of national manufacturing activity fell to 51.2 in July, down from 51.7 in June. While still indicating expansion, the July reading was below Wall Street’s expectations for a slight improvement from June’s sluggish figure. This is the fourth consecutive monthly decline.
U.S. construction spending fell 1.3% during the month of June, the Commerce Department reported Thursday. This decline also defied expectations for improvement.
Taken together, the reports bolster the case for the Fed’s rate cut this week. They may fuel calls for the Fed to go even further.
“Respondents expressed less concern about U.S.-China trade turbulence, but trade remains a significant issue. More respondents noted supply chain adjustments as a result of moving manufacturing from China,” said Timothy R. Fiore, chair of the Institute for Supply Management Manufacturing Business Survey Committee.
It was not all bad news in the ISM figures. New orders improved in the month while both producer and customer inventories contracted, possibly pointing to better growth later this year. But orders for export fell, highlighting the drag that global sluggishness is having on the U.S. economy.
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