US ISM manufacturing index ticks lower in July

The US ISM manufacturing index fell to 52.7 in July from 53.5 in June, against 54.0 and consensus expectations 53.5 for a broadly stable reading. The July decline brings the index to its lowest level since April. However, the move lower was led by components of the index that we view as less indicative of future activity. Production 56.0, previous- 54.0 rose to the strongest level since April, and new orders 56.5, previous- 56.0 registered the highest reading so far this year.

Employment, meanwhile, fell to 52.7 previous: 55.5, which was expected, given early indications from regional manufacturing data. This decline was exacerbated by weak readings on inventories 49.5, previous: 53.0 and persistent softness in supplier deliveries 48.9, previous-48.8. Price pressures remained limited 44.0, previous -49.5 and export demand was soft in July 48.0, previous- 49.5. However, these indicators do not affect the headline index. Overall, it is viewed that, the details of the July ISM as a bit more positive as the headline index would suggest, but expect domestic manufacturing to remain sluggish in Q3, says Barclays.