Manufacturing Hits Three-Year Low

Auto manufacturing declined in May and June from the first four months of the year, and industry analysts have cut estimates for demand in 2013 by half a million vehicles, mirroring other stalled economic indicators. The emerging growth of the housing sector, after six years of negative numbers, is being overshadowed by declining numbers elsewhere and downwardly revised growth predictions.

Manufacturing production in the U.S. fell to a three-year low in June, growing evidence that the economy is heading into a third straight summer lull.

The Institute for Supply Management's index of manufacturing activity fell to 49.7 in June, the trade group reported July 2, down from 53.5 in May and the lowest level since the first post-recession report from July 2009. Index readings below 50 indicate a decline.

The ISM's new order index, a measure of future manufacturing activity, also fell from 60.1 to 47.8 in June, the first sub-50 reading since April 2009. Export levels of manufactured goods have also fallen, likely caused by tightened spending overseas due to the European debt crisis, along with slower growth in China, India and other emerging markets.

Domestic consumer confidence has fallen for four straight months, according to one index, as job growth has slowed and economic indicators have been revised downward. The improving housing market, a drag on the recovery until earlier this year, is in danger of being overshadowed by negative trends in other areas.

The Federal Reserve has cut its forecast for annual growth, from 2.4 to 1.9 percent in 2012, in addition to predicting that unemployment will not fall far from current levels before year's end. An average of only 73,000 jobs were added per month in April and May, down from an average of 226,000 per month from January through March. Unemployment also ticked up to 8.2 percent in May, up from 8.1 and the first increase in a year.