Manufacturing Quiet in July

Manufacturing is down to recession-era levels, and a lack of new orders could keep it there, dimming hope for continued economic growth in the second half of the year.

After reaching a three-year low in June, an important manufacturing index in July showed little improvement, and a low 'new orders' reading could keep growth at a minimum for the foreseeable future.

The Institute for Supply Management's factory index was 49.8 for July, showing little improvement from a three-year low of 49.7 reached in June, according to an August 2 report from the Arizona-based group. A Bloomberg survey of economists projected a 50.2 reading, which would have been above the middle point of 50 that signifies an expansion rather than a contraction of the market.

The ISM's measure of new orders was similarly unaffected; the 47.8 rating in June climbed to only 48 in July. These two months mark the worst back-to-back reading since the recession was still underway. Growth in bookings was also limited to the lowest level since February 2009.

Manufacturing represents about 12 percent of the economy and has been one of the most important market sectors since the recession ended. The same survey found little change in the production index, from 51 in June to 51.3 in July, and their employment gauge fell from 56.6 in June to 52 in July, the lowest level since December 2009.

''It's the new orders that is really something to watch at this point,'' Brad Holcomb, chairman of the ISM survey, said on a conference call with reporters. ''I would be very concerned about production staying positive.''