The U.S. manufacturing sector contracted in June for the fourth month in a row, following a two-month expansion preceded by 26 straight months of contraction. The ISM Manufacturing PMI registered 49%, 0.5 percentage points lower compared to the 48.5% recorded in May.
The June Manufacturing PMI indicates the overall economy grew for the 62st straight month after last contracting in May 2020. (A manufacturing PMI above 42.3%, over a period of time, generally indicates an expansion of the overall economy.)
The Employment Index registered 45% in June, 1.8 pp lower than May’s reading of 46.8%. Prices Index registered 69.7% in June, increasing 0.3 pp compared to the May reading of 69.4%, indicating raw materials prices increased for the ninth straight month after a decrease in September. New Orders Index contracted in June for the fifth consecutive month after three consecutive months of expansion, registering 46.4%, a decrease of 1.2 pp compared to May’s figure of 47.6%. This reading is below the 12-month moving average (48.4%) for the New Orders Index.
New Export Orders Index contracted in June, registering 46.3% in June, up 6.2 pp from May’s reading of 40.1%. “Export orders contracted for the fourth consecutive month after growing in January and February. This brief period of expansion followed an ‘unchanged’ status (a reading of 50), preceded by six straight months of contraction. The slower contraction for new export orders could be indicative of a ‘too low’ level of customer’s inventories returning some of the demand that had been lost due to slow overseas growth and counter tariffs on many U.S.-manufactured products,” said Susan Spence, chair of the Institute for Supply Management.
Imports Index remained in contraction for the third month in June after expanding for three straight months. The June reading of 47.4% is 7.5 pp higher than the reading of 39.9% reported in May. “Imports are contracting, though at a slower rate. The need to maintain import levels from previous months is lower, due in large part to demand and tariff pricing,” says Spence.
The Inventories Index registered 46.7% in June, up 2.2 pp compared to the reading of 44.5% reported in May.
Read the ISM release.
