US Manufacturing PMI Relatively Flat at 53.3 Percent in June

The US ISM Manufacturing PMI report indicated continued industry expansion in June, but the overall index declined 0.7 percent relative to the May reading. Of the five subindexes that make up the PMI, the New Orders and Production indexes grew more slowly compared with the previous month, the Supplier Deliveries Index slowed at a slower rate, and the Employment and Inventories indexes improved, with the latter entering expansion territory. Price volatility remained an issue, with 50 percent of panelists citing it as an issue for their companies.

The New Orders Index expanded for the sixth consecutive month after four straight readings in contraction but was also down by 0.8 percentage points compared with May’s figure. The June reading of the Production Index (52.2 percent) was 2.1 percentage points lower than May’s reading. The Prices Index remained in expansion (or “increasing” territory), registering 73 percent, a 9.1-percentage-point decrease from May’s reading of 82.1 percent. The Backlog of Orders Index registered 50.5 percent, down 1.7 percentage points. The Employment Index registered 49.7 percent, up 1.1 percentage points from May’s figure.

The Supplier Deliveries Index indicated slowing performance for the seventh month in a row after one month in “faster” territory. The June reading of 57.4 percent was down 3.2 percentage points from May. The Inventories Index registered 51.4 percent, returning to expansion territory and up 1.5 percentage points compared with May’s reading. The Customers’ Inventories Index reading of 42.3 percent was 0.4 percentage point lower compared with May.

The New Export Orders Index returned to contraction territory with a reading of 48.5 percent, 2.1 percentage points lower than May. The Imports Index registered 52.9 percent, 0.1 percentage point lower than May’s reading.

Five percent of the sector’s gross domestic product (GDP) contracted in June, compared with 2 percent in May, and the percentage of manufacturing GDP in strong contraction was 3 percent, compared with 2 percent in May. All but one (Petroleum & Coal Products) of the six largest manufacturing industries expanded in June, in the following order: Computer & Electronic Products; Machinery; Transportation Equipment; Chemical Products; and Food, Beverage & Tobacco Products.

The 14 manufacturing industries reporting growth in June—listed in order—were: 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 were: Paper Products; Furniture & Related Products; and Wood Products.

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