July 2011 ISM Report: Weak U.S. Factory Data Dampens Hiring Hopes
The market expected the index to drop slightly to 54.3 percent, but instead it fell to 50.9 percent. This indicates the pace of growth in this key industry--making up 11.2 percent of the nation's GDP--is slowing down more quickly than expected, and new orders are declining. (However, some anecdotal evidence exists that car manufacturing may be beginning to pick up.)
Bradley Holcomb, chair of the ISM Manufacturing Business Survey Committee, said the numbers are "disappointing and represent the lowest for the year," but added that 50.9 is still in the growth range. (A reading below 50 indicates contraction in the manufacturing sector, and a number above 50 means expansion.)
"The performance of the manufacturing industry should be of particular concern in this recession," noted The Atlantic Business Channel. "Since the beginning of 2008, over two million jobs have been shed by the industry. Although it had gained about 250,000 jobs since December 2009, if the industry does begin contracting, then fresh rounds of layoffs will follow. The only other sector to have similar losses was construction, but it hadn't begun recovering."
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