The US ISM’s index for manufacturing fell by 1.1 percentage points to 59.5 in July from 60.6 in June, its lowest reading since January. Manufacturing activity declined for the second month in a row in July amid a short supply of raw materials, according to the Institute of Supply Management’s survey.
Prices paid by manufacturers fell to the lowest in the last 16 months, while the index for supplier deliveries declined further after reaching a 47-year high in May.
In July, around 17 out of 18 manufacturing industries, including machinery, computer, and electronic products, reported a growth.
The index for prices paid by manufacturers declined to 85.7 in July from 92.1 in June.
The survey’s measure of supplier deliveries slumped to 72.5 in July from 75.1 in June. The index rose to 78.8 in May, the highest reading since April 1974.
The ISM survey suggested that machinery manufacturers had to place orders months ahead of time to get a place in the line. Manufacturers of computers and electronics said purchases continued to have long lead times as the shortage of raw materials continued.
There has also been a scarcity of inputs in the automobile industry where several carmakers have been forced to idle their assembly plants due to the ongoing shortage of semiconductors.
The forward-looking new orders sub-index in the ISM survey fell for a second straight month. Businesses depleted inventories rapidly in Q2, while retailer stocks also remained below normal levels.