MarketWatch ^ | 12:44 PM EDT July 2, 2012 | By MarketWatch
WASHINGTON (MarketWatch) — There’s no way to sugarcoat it: The already-sluggish U.S. economy is stalling out, stung by doubts about our economic and fiscal future.
The Institute for Supply Management reported that its manufacturing index dropped to 49.7% in June from 53.5% in May, signaling that the manufacturing sector is contracting for the first time since mid-2009. Read our complete news coverage of manufacturing activity shrinking in June.
Both the ISM headline index and the ISM new orders index plunged below 50% in June.
By itself, the decline in the ISM index below the benchmark 50% level does not mean that the economy is in a recession, but it does make it much more likely. A reading of 49.7% is consistent with slow, but positive growth of about 2.4%, according to the ISM.
The manufacturing sector has been the most robust part of the economy coming out of the recession, but that momentum has now been lost. The U.S. has now caught the fever racing through Europe and China.
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