Core Insights - The U.S. manufacturing sector continued to contract in July, marking the fifth consecutive month of decline after a brief expansion earlier in the year [1] - The Manufacturing PMI for July was reported at 48%, a decrease of 1 percentage point from June, indicating ongoing challenges in the manufacturing recovery [1][2] - Despite the contraction in manufacturing, the overall U.S. economy has experienced growth for 63 consecutive months since the brief recession in April 2020 [1] Manufacturing Activity - The new orders index recorded at 47.1%, indicating a slight easing in the trend of order reduction, although it remains in contraction territory [2] - The production index improved to 51.4%, entering the expansion zone, suggesting some manufacturers have increased capacity [2] - The employment index fell to 43.4%, reflecting a cautious approach to hiring among businesses [2][3] Price and Supply Chain Dynamics - The prices index was at 64.8%, showing continued cost increases but a significant drop from 69.7% in the previous month, indicating some relief from inflationary pressures [2] - The supply delivery index decreased to 49.3%, suggesting improved supply chain efficiency, partly due to reduced demand [2][3] - The inventory index fell to 48.9%, indicating ongoing adjustments to align inventory levels with actual orders [2] Export and Import Trends - The new export orders index was at 46.1%, slightly down from June, while the import index was at 47.6%, indicating weak internal and external demand [2] Overall Manufacturing Health - Approximately 79% of U.S. manufacturing industries were in contraction in July, a significant increase from 46% in June, highlighting widespread industry weakness [3] - All six major manufacturing sectors, which had previously shown expansion in June, fell into contraction in July, indicating comprehensive pressure across the industry [3][4] - The overall manufacturing performance remains weak, with a broadening contraction suggesting that the sector will face challenges in the near term [4]