Economic activity in the U.S. manufacturing sector contracted for the third consecutive month in June, according to the latest report from the Institute for Supply Management (ISM).
- The Manufacturing PMI® registered 48.5% in June, a slight decline of 0.2 percentage points from May, marking the lowest level in the last four months. This contraction represents the third straight drop and the 19th occurrence in the last 20 months.
Prices & Employment: The ISM report highlighted declines in both prices and employment for June. The Prices Index fell to 52.1%, down 4.9 percentage points from May, reaching the lowest level all year.
- The Employment Index also declined, registering 49.3%, a decrease of 1.8 percentage points from May, though it remains the second highest level in the last eight months.
Some Good News: Despite the overall negative trends, there was a glimmer of optimism with the New Orders Index, which rose to 49.3% in June. This increase of 3.9 percentage points from May marks the highest level in the past three months, although it remains in contraction territory.
What They’re Saying: Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management, noted in the report: “U.S. manufacturing activity continued in contraction at the close of the second quarter. Demand was weak again, output declined, and inputs stayed accommodative. Production execution was down compared to the previous month, likely causing revenue declines, putting pressure on profitability.”
Bottom Line: The ongoing contraction in the manufacturing sector reflects broader economic challenges, including weak demand and declining output, which have persisted throughout the second quarter of the year. As manufacturers navigate these headwinds, the sector’s performance will be closely monitored for signs of stabilization or further decline in the coming months.
