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The first of the pivotal July numbers have made their appearance, and this initial issuance wasn't especially positive, as the Institute for Supply Management, the Tempe, Arizona-based trade group, earlier this morning reported that manufacturing activity had continued to backtrack slightly during the latest month.

Specifically, the group intoned that its manufacturing survey registered a result of 49.8 for July. That was just nominally better than the 49.7 result in June, but it also was narrowly below the 50.0 dividing line between an expanding industrial sector and one that is contracting. All told, this was the second month in a row that manufacturing activity had slipped following an approximate three-year span in which this key sector had been rebounding, if at times unevenly. All told, one needs to go back to July of 2009, when the nation was first coming out of the long recession, to see the last time--before this past June--that there was a contraction in manufacturing activity. At the low point of the contraction, in December of 2008, manufacturing had slowed to just 33.1.

In addition to this aggregate result, we saw a continued declines in new orders, with that component scoring just 48.0 last month, a bare two-tenths of a percentage point above the June reading of 47.8. Also, supplier deliveries eased from 48.9 in June to 48.7 in July. Other components continuing to slip were inventories, backlogs--which fell to just 43.0 in July--prices, and exports.

Countering this fairly broad down move were gains in production and employment. However, the employment component also slowed its rate of improvement, coming in at a reading of 52.0 last month, which was notably less than the June level of 56.6.

Meanwhile, of the 18 manufacturing industries included in this report, just seven reported growth in July, led by plastics and rubber products, electrical equipment, appliances and components. On the other hand, 11 industries reported declining levels of activity last month.

As to comments by the purchasing managers themselves, there were reports of strong customer orders in machinery as well as in the auto area, but there were also indications of a marked slowing in wood products and a continued slowdown in the government military sector. Taken as a whole, the report was mildly disconcerting, as the absolute level of 49.8 suggests some pullback in strength in this core area. The result also was a bit below the consensus expectation of a nominally expansionary 50.4. Note also that the same group will issue its report on the non-manufacturing sector on Friday. A flattish reading is expected versus the 52.1 result in June.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.