In the weak U.S. manufacturing sector, furniture continues to shine

TEMPE, Ariz. – Continuing the narrative from June, U.S. manufacturing remains weak, but the furniture segment once again outperformed the overall sector, showing growth.

The Institute for Supply Management’s July report measured the manufacturing sector at 46.4%, indicating contraction for the ninth consecutive month but at a 0.4% slower rate than it did in June. The sector remains in a slightly better position than its low point in May 2020, when it recorded one of its poorest performances ever at 43.1%.

“The U.S. manufacturing sector shrank again, but the uptick in the index indicates a marginally slower rate of contraction,” said Timothy R. Fiore, ISM chairman. “The July composite index reading reflects companies continuing to manage outputs down as order softness continues. Demand eased again, with new orders contracting, although at a slower rate, new export orders moving deeper into contraction and order backlog improving compared to June but remaining at a low level.

“Amid mixed sentiment about when significant growth will return, panelists’ companies reduced production and continued to manage head counts down, to a greater extent than in previous months. Demand remains weak but marginally better compared to June,” he continued. “Production slowed due to lack of work, and suppliers continue to have capacity. There are signs of more employment reduction actions in the near term to better match production output.”

For the third month in a row, furniture was one of the bright spots. Of the 18 manufacturing industries recognized by the ISM, furniture was one of just two to report growth, along with petroleum and coal products.

Furniture was one of four to report new order growth, leading the pack. Twelve industries reported a decline. Similarly in June, it was one of just three to report an increase. In May, furniture reported an increase in new orders for the first time in 13 months.

Furniture posted no change in production output and in employment. In June, it reported gains in both. Furniture was one of 14 to report paying less for raw materials and was one of three to report growth in order backlog. It was one of seven to report lower volumes of imports.