Nation’s Manufacturing Growth Slows in July

The nation’s manufacturers reported a slowing of growth in July and only modest increases in prices for raw materials, easing Wall Street fears of an overheating economy.

A survey released Monday by the National Assn. of Purchasing Management indicated that the U.S. manufacturing sector grew in July for the sixth straight month, but not as strongly as in the previous month and below analysts’ predictions. Price increases also were below expectations.

Bryan Jordan, an analyst with Banc One Investment Advisors, noted that the manufacturing figures, which followed last week’s report that the nation’s economic growth slowed to 2.3% in the second quarter, “are part of a pattern indicating the economy is starting to moderate.” That, he said, “will keep the Federal Reserve from being too aggressive about interest rates.”

The purchasing managers group, which represents executives who buy raw materials and supplies for industry, said its monthly index of manufacturing activity registered 53.4% in July, compared with 57% in June. Figures above 50% indicate growth.

Economic analysts had predicted an index reading of 56% in July.

The survey results are watched closely because they are the first national reading for July on U.S. manufacturing performance, a key sector of the economy.

The survey’s price index, at 54.7% in July compared with 53.5% in June, marked the third consecutive month with a price reading above 50%.

The employment index, meanwhile, fell to 49.6% in July from 51.9% in June. Employment in the manufacturing industry has been declining for nearly a year.

Separately, the Commerce Department reported construction spending rebounded slightly in June, rising 0.5%, after falling for two straight months. Spending rose to a seasonally adjusted annual rate of $699.4 billion, following drops of 1.4% in both May and April.

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Purchasing Managers Index

Tracks overall business activity of more than 300 industrial companies.

July: 53.4%

Source: National Assn. of Purchasing Management