June 2019 Manufacturing ISM Report On Business Shows Manufacturing Continues Growth, Albeit with Lowest PMI Since October 2016

By Steve Clouther

Industry Trends

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector expanded in June, and the overall economy grew for the 122nd consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing expanded in June, as the PMI registered 51.7 percent, a decrease of 0.4 percentage point from the May reading of 52.1 percent.  This is the lowest reading since October 2016, when the index registered 51.7 percent and indicates growth in manufacturing for the 34th consecutive month.

ISM’s New Orders Index registered 50 percent in June, which is a decrease of 2.7 percentage points when compared to the 52.7 percent reported for May, indicating that new orders remained unchanged after increasing for 41 consecutive months.

ISM’s Production Index registered 54.1 percent in June, which is an increase of 2.8 percentage points when compared to the 51.3 percent reported for May, indicating growth in production for the 34th consecutive month.

ISM’s Employment Index registered 54.5 percent in June, an increase of 0.8 percentage point when compared to the May reading of 53.7 percent.  This indicates growth in employment in June for the 33rd consecutive month.

The delivery performance of suppliers to manufacturing organizations slowed in June, as the Supplier Deliveries Index registered 50.7 percent.  This is 1.3 percentage points lower than the 52 percent reported for May and the 40th straight month of slowing supplier deliveries.

The Inventories Index registered 49.1 percent in June, a decrease of 1.8 percentage points from the 50.9 percent reported for May.  The index contracted for the first time since December 2017.

ISM’s Backlog of Orders Index registered 47.4 percent in June, which is 0.2 percentage point higher than the 47.2 percent reported in May, indicating order backlogs contracted for a second consecutive month, at a slower rate in June.

Of the 18 manufacturing industries, 12 reported growth in June, in the following order: Furniture & Related Products; Printing & Related Support Activities; Textile Mills; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Chemical Products; Computer & Electronic Products; Paper Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; and Machinery.  The five industries reporting contraction in June are: Apparel, Leather & Allied Products; Primary Metals; Wood Products; Transportation Equipment; and Fabricated Metal Products.

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