June 2024 Manufacturing ISM Report On Business Reports the Sector’s Third Consecutive Month of Contraction

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 contracted in June for the third consecutive month and the 19th time in the last 20 months, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The U.S. manufacturing sector contracted for the third consecutive month in June, as the Manufacturing PMI registered 48.5 percent, down 0.2 percentage point compared to May’s reading of 48.7 percent. After breaking a 16-month streak of contraction by expanding in March, the manufacturing sector has contracted the last three months, and at a faster rate in June.

ISM’s New Orders Index contracted in June for the third month, registering 49.3 percent, an increase of 3.9 percentage points compared to May’s figure of 45.4 percent. The New Orders Index hasn’t indicated consistent growth since a 24-month streak of expansion ended in May 2022.

The Production Index fell into contraction territory in June, registering 48.5 percent, 1.7 percentage points lower than the May reading of 50.2 percent.

ISM’s Employment Index registered 49.3 percent in June, 1.8 percentage points lower than the May reading of 51.1 percent. The index indicated employment contracted after an expansion in May which broke a seven-month streak of contraction.

Delivery performance of suppliers to manufacturing organizations was faster in June, with the Supplier Deliveries Index registering 49.8 percent, a 0.9-percentage point gain compared to the reading of 48.9 percent reported in May. This is the fourth consecutive month of faster deliveries after one month of slower performance preceded by 16 straight months in “faster” territory.

The Inventories Index registered 45.4 percent in June, down 2.5 percentage points compared to the reading of 47.9 percent reported in May. Manufacturing inventories contracted at a faster rate compared to the previous month.

ISM’s Backlog of Orders Index registered 41.7 percent, down 0.7 percentage point from the 42.4 percent reported in May, indicating order backlogs contracted for the 21st consecutive month after a 27-month period of expansion.

The eight manufacturing industries reporting growth in June — in order — are: Printing & Related Support Activities; Petroleum & Coal Products; Primary Metals; Furniture & Related Products; Paper Products; Chemical Products; Miscellaneous Manufacturing; and Nonmetallic Mineral Products. The nine industries reporting contraction in June — in the following order — are: Textile Mills; Machinery; Fabricated Metal Products; Wood Products; Transportation Equipment; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; and Computer & Electronic Products.