TEMPE AZ – Economic activity in the US manufacturing sector contracted in July for the second time since July 2009, says the Institute for Supply Management.

The July PMI registered 49.8%, up 0.1 percentage point from June. New orders were 48%, up 0.2 percentage point, while production was up 0.3 to 51.3%. Inventories rose 5 percentage points to 49%, and customers inventories went up 1 point to 49.5%. Backlogs dropped 1.5 points to 43%.

The PMI was 49.8%, an increase of 0.1 percentage point from June's reading of 49.7%, indicating contraction in the manufacturing sector for the second consecutive month. The drops followed 34 consecutive months of expansion.

The New Orders Index rose 0.2 percentage points to 48%, indicating contraction for the second consecutive month, but at a slightly slower rate.

Both the Production Index and the Employment Index grew, registering 51.3% and 52%, respectively. The Price Index for raw materials rose 2.5 percentage points to 39.5%, indicating lower prices on average for the third consecutive month.

"A growing number of comments from the panel this month reflect a slowdown in their businesses and general concern over increasing economic uncertainty,” said Bradley J. Holcomb, chair of ISM in a statement.

The overall economy grew for the 38th consecutive month.