Marking the fourth consecutive month of contraction, the ISM (Institute for Supply Management) Manufacturing PMI registered 49% in June, indicating contraction at a slower rate when compared to May’s reading of 48.5%.
“Of the five subindexes that directly factor into the Manufacturing PMI, two (production and supplier deliveries) were in expansion territory, up from one in May,” says Susan Spence, chair of the ISM’s manufacturing business survey committee. Anything lower than 50% represents contraction.
The production index grew 4.9 points to 50.3% in June. The new orders and employment indexes contracted at a faster rate, falling to 46.4% and 45.0%, respectively.
“Regarding output, the production index increased month over month and is now in expansion territory, however; the employment index dropped further into contraction as managing head count is still the norm, as opposed to hiring. The mixed indicators in output suggest companies still being cautious in their hiring even with an increase in production,” Spence says.
After falling into extreme contraction with a May reading of 39.9%, the imports index increased 7.5 points to 47.4% in June.
Nine industries reported growth in June:
- Apparel, leather & allied products
- Petroleum & coal products
- Nonmetallic mineral products
- Miscellaneous manufacturing
- Furniture & related products
- Computer & electronic products
- Machinery
- Food, beverage & tobacco products
- Electrical equipment, appliances & components
“Of the six largest manufacturing industries, four (petroleum & coal products; computer & electronic products; machinery; and food, beverage & tobacco products) expanded in June, compared to two in May,” says Spence.
Respondents in the comments of the survey continue to report major concerns and challenges surrounding tariff volatility.
“The tariff mess has utterly stopped sales globally and domestically. Everyone is on pause. Orders have collapsed,” reports a respondent in the machinery sector.
“Tariffs continue to cause confusion and uncertainty for long-term procurement decisions. The situation remains too volatile to firmly put such plans into place,” writes a respondent in the computer & electronic products industry.
