Investing.com - Manufacturing activity in the U.S. fell more than expected in July, according to an industry report released on Tuesday, dampening optimism over the U.S. economy.
The Institute for Supply Management (ISM) said its index of manufacturing activity retreated to 56.3 last month from June’s reading of 57.8.
Analysts had forecast the index to fall to only 56.5.
A reading above 50.0 indicates expansion in the manufacturing sector, below indicates contraction.
Despite the worse-than-expected reading, the ISM indicated that the survey suggested that the overall economy had grown for the 98th consecutive month.
The new orders index dropped to 60.4 in July from 63.5 a month earlier.
The employment index decreased to 55.2 last month from the prior 57.2 and compared to forecasts for a drop to 55.1.
The prices paid index rose to 62.0 in July, from the previous reading of 55.0. Economists had forecast an increase to just 55.5.
“Comments from the panel generally reflect expanding business conditions, with new orders, production, employment, backlog and exports all growing in July compared to June, as well as supplier deliveries slowing (improving) and inventories unchanged during the period,” the ISM noted.
After the report, which was published simultaneously with construction spending for June, EUR/USD was trading at 1.1833 from around 1.1814 ahead of the release of the data, GBP/USD was at 1.3235 from 1.3225 earlier, while USD/JPY was at 110.12 from 110.18 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 92.68, compared to 92.77 ahead of the report.
Meanwhile, U.S. stock markets were trading higher after the open. The Dow 30 gained 63 points, or 0.29%, the S&P 500 rose 5 points, or 0.20%, while the Nasdaq Composite traded up 14 points, or 0.22%.
Elsewhere, in the commodities market, gold futures traded at $1,272.26 a troy ounce, compared to $1,268.68 ahead of the data, while crude oil changed hands at $49.55 compared to $49.56 earlier.