The region's ISM-Milwaukee seasonally adjusted purchasing manager's index (PMI) was 46.7, according to the report. When the index is above 50 that indicates that the manufacturing sector is growing. When it is below 50 the sector is declining.
Until now, the region's ISM PMI has consistently been above 50 since July of 2009.
In June the index was at 60.2, but the region's manufacturing sector took a big dip in July.
Summer months are always softer said Dr. Doug Fisher, director of the Center for Supply Chain Management at Marquette University, but he said he was unsure of the reason for the big July drop in the index. Global economic uncertainty and concern about the upcoming November elections could be factors contributing to the manufacturing sector slowdown, he said.
"I anticipated some softness but I did not anticipate such a dramatic move," Fisher said.
One silver lining in the report: the region's manufacturing hiring indexes dipped, but remain at growth level. The index for blue collar workers in the region fell from 63.3 in June to 51.4 in July and the white collar manufacturing employment index fell from 66.8 in June to 53.1 in July.
"The order pipeline may be a little thinner than in previous months, but the fact that they're still hiring to meet demand is good," Fisher said.
Fisher also cautioned that the report reflects just one month of activity, so next month may provide more insight into the severity of the slowdown.
"One month, one data point doesn't make a trend," Fisher said. "I don't recall seeing this major a change up or down. That always tells me I need to see more than one month."