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Ahead of the Bell: US factories likely stayed busy in July

The ISM Manufacturing Index for July was released early Monday, showing another report in positive territory at 52.7 for the month.

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The Commerce Department reported last Monday that orders to U.S. factories for big-ticket goods rose sharply in June, though the gain was driven by a surge in demand for commercial aircraft – a volatile category.

The July data is disappointing relative to the strong reading in June, but 52.7 is higher than the YTD average coming into the month.

In both the ISM and Markit reports, readings over 50 indicate improving conditions but are well below levels seen past year.

Economists forecast that the manufacturing index from the trade group of purchasing managers will come in at 53.5, unchanged from June, as mentioned by a survey by FactSet.

The ISM production index climbed to 56 from 54. The index of activity in the sector is expected to tick up to 56.2 in July from 56.0 in June.

Demand appears to be largely domestic.

The ISM also said the prices index fell to 44.0 in July from 49.5 in June, pointing to lower raw materials prices for the ninth consecutive month.

The employment index decreased to 52.7 in July from 55.5 in June.

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The data “suggests that the economic recovery is leaking momentum going into the second half of this year”, said Millan Mulraine, deputy head of U.S. Strategy at TD Securities.

WASHINGTON — U.S. factories were a little less busy last month