Economic activity in the U.S. manufacturing sector grew for the sixth consecutive month in June to 53.3%, which was 0.7 lower than May, according to the Institute for Supply Management’s latest Purchasing Managers’ Index (PMI).
Although the Manufacturing PMI remained below the 50-point threshold that signals factory-sector contraction, the index stayed above ISM's historical 47.5 level that has generally been consistent with expansion in the broader U.S. economy over time.
Five of the six largest manufacturing industries — computer and electronic products, machinery, transportation equipment, chemical products, and food, beverage and tobacco products — expanded in June. The exception was petroleum and coal products.
“In June, U.S. manufacturing activity remained in expansion territory, growing at a slightly slower pace as compared to the month before,” Susan Pence, chair of the ISM’s Manufacturing Business Survey Committee, said Wednesday.
Of the five subindexes that make up the PMI, the New Orders and Production indexes grew slower compared to the previous month, the Supplier Deliveries Index slowed, and the Employment and Inventories indexes improved with the latter entering expansion territory.
Two of four demand indicators (New Orders and Backlog of Orders) were in expansion, and the Customers’ Inventories Index remained in ‘too low’ territory, contracting at a faster rate. New Export Orders returned to contraction, losing 2.1 percentage points since May.
Regarding output, the Production Index is in expansion for the eighth month in a row, and the Employment Index increased by 1.1 percentage point but remained in contraction.
Inputs (defined as supplier deliveries, inventories, prices, and imports) were mixed, with the Supplier Deliveries Index decreasing 3.2 percentage points, the Inventories Index entering into expansion, the Imports Index losing 0.1 percentage point but staying in expansion, and Prices Index relief coming with a 9.1-percentage point drop, a reading of 73% versus 82.1% in May.
“Looking at the manufacturing economy, 5% of the sector’s gross domestic product (GDP) contracted in June, compared to 2% in May, and the percentage of manufacturing GDP in strong contraction (a PMI of 45% or lower) was 3%, compared to 2% in May,” Price said.
The 14 manufacturing industries reporting growth in June (listed in order) are: Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Textile Mills; Primary Metals; Apparel, Leather & Allied Products; Fabricated Metal Products; Computer & Electronic Products; Machinery; Plastics & Rubber Products; Transportation Equipment; Nonmetallic Mineral Products; Chemical Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The three industries in contraction are: Paper Products; Furniture & Related Products; and Wood Products.
