Tempe, Ariz.—Manufacturing activity declined for the 12^th consecutive month in July, according to the National Assn. of Purchasing Management.

In its July Report on Business , NAPM said its Purchasing Managers' Index registered 43.6 for the month, a decrease of 1.1 percent from the 44.7 percent reported in June. A reading above 50 percent indicates that the manufacturing economy is expanding, while a reading below 50 percent means it is contracting.

"The manufacturing sector continued to decline in July, as has been the trend since August 2000," said Norbert J. Ore, CPM, chairman of NAPM's Manufacturing Business Survey Committee. "The rate of decline accelerated during the month as new orders softened somewhat from June and inventory liquidation accelerated. Manufacturers continue to reduce payrolls and capital expenditures in cost-cutting efforts."

Manufacturing employment declined in July as the index fell below the break even point for the 10^th consecutive month. In addition, NAPM's Backlog of Orders Index shows that order backlogs declined for the 15^th consecutive month.

"The manufacturing sector is in its 12^th month of decline and appears to continue to lack drivers that will stimulate recovery," Ore said.

Capital expenditures hit a low for the history of the index, revealing that manufacturers are backing away from capital investments. And while lower prices for natural gas, gasoline and diesel should help ease cost pressures, the report shows energy prices remain high.

Of the 20 industries covered in the manufacturing sector, three reported growth: rubber & plastics; glass, stone & aggregate; and instruments & photographic equipment.