The U.S. manufacturing sector expanded for the sixth consecutive month in July, though at the slowest pace since March, the Institute for Supply Management said Wednesday.
The group said its manufacturing index, which reflects the opinions of purchasing managers at factories, plants and utilities, registered 53.8 in July, down from 56.0 in June.
Wall Street expected the manufacturing index to remain unchanged from June, according to the consensus estimate of Wall Street economists polled by Thomson/IFR.
A reading above 50 indicates growth while a reading below 50 indicates contraction.
New orders and production led growth, while inventories continued to contract, as they have for the past year, according to the report.
Still, both new orders and prices were slightly weaker in July than in June. The index for new orders registered 57.5 in July, down from 60.3 the month before, while the reading for production was 55.6 in July, down from 62.9 in June.
The top performing industries, in order, were wood products; furniture and related products; food, beverage and tobacco products; miscellaneous manufacturing; paper products; textile mills; chemical products; computer and electronic products; nonmetallic mineral products, and primary metals.
“Taken with some of the other indicators we saw today, the overall impression is the economy is continuing to muddle along,” said Douglas Porter, senior economist at Nesbitt Burns Securities of Chicago.
In other economic news, the National Association of Realtors reported Wednesday that pending sales of existing homes rose 5 percent in June from a month earlier, marking the largest monthly gain in more than three years. But the Mortgage Bankers Association said that its index of home loan applications slipped last week for the second straight week.
The stock market, concerned about problems in the subprime mortgage market and other credit worries, was volatile.
In midmorning trading, the Dow Jones Industrial Average fell 43.25, or 0.33 percent, to 13,168.74. The Standard & Poor’s 500 fell 7.34, or .50 percent, to 1,447.93 and the Nasdaq composite dropped 15.88, or 0.62 percent, to 2,530.39.
The ISM report showed prices still advancing, with a reading of 65.0 in July compared with 68.0 in June.
“Upward pricing pressures now in their seventh month continue to be a major concern for supply managers,” said Norbert J. Ore., chair of the institute’s survey committee.
That concern was magnified Wednesday as oil prices hit a new record, reaching $78.72 a barrel in New York trading.