ISM's June Manufacturing Report: 10 Things to Know

ISM's June Manufacturing Report: 10 Things to Know

Supply chain professionals report continued manufacturing growth in June and a strengthening outlook.

The Institute for Supply Management (ISM) released its June report on manufacturing.

  1. The June PMI rose to 53.5 from 52.8 in May, ISM reported. Analysts had expected a slightly lower figure of 53.1. Any figure over 50 indicates growth in manufacturing.
  2. Of the 18 manufacturing industries, 11 reported growth in June, led by furniture, wood products and nometallic mineral products.
  3. The oil and coal industry led the sectors that contracted in June. “Downturn in oil and gas markets impacting demand,” commented one supply chain executive.
  4. Good news ahead – the new orders component of the PMI gained 0.2% in June to 56.0.
  5. The June PMI indicates “manufacturing activity has begun to recover from the softer demand, output and hiring levels experienced earlier in the year,” says NAM Chief Economist Chad Moutray, but he adds that growth is still “at a slower pace than desired.” The PMI averaged 56.9 in the second half of 2014, Moutray points out, but a weaker 52.6 in the first six months of 2015.
  6. Manufacturers are hiring. The employment index registered 55.5 in June, 3.8% above the May figure.
  7. Production fell slightly, from 54.5 in May to 54.0 in June.
  8. Raw materials are costing manufacturers less. The prices index stayed at 49.5 in May, indicating lower prices for raw materials for the eighth month in a row. Credit lower energy prices.
  9. Cracks in the egg market: The avian flu outbreak is raising egg prices. “Avian flu is having a huge effect on egg pricing and items manufactured with eggs,” a food manufacturer commented to ISM.
  10. While the PMI has been in growth territory throughout 2015, industrial production figures from the Federal Reserve aren't as rosy, with declines in both April and May. With another slide in ISM's backlog of orders index (down 6.5% to 47) and global financial stresses, Cliff Waldman, director of economic studies for the MAPI Foundation, warned that short-term prospects for U.S. manufacturers "remain murky."
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