The Institute for Supply Management's index of national factory activity dipped to 52.8 last month, the lowest reading since June 2020, when the sector was pulling out of a pandemic-induced slump. The ISM index was at 53.0 in June.
Economists polled by Reuters had forecast the index would fall to 52.0. A reading above 48.7 over a period of time generally indicates an expansion of the overall economy.
A reading above 50 indicates expansion in manufacturing, which accounts for 11.9% of the U.S. economy.
Supply bottlenecks appear to be easing. The ISM's measure of supplier deliveries dropped to 55.2 from 57.3 in June. A reading above 50% indicates slower deliveries to factories.