Manufacturing growth in the U.S. slowed in June, suggesting the economic recovery is losing strength. The U.S. Institute for Supply Management’s manufacturing index fell to 56.2 from 59.7 in May. Anything above 50 on the index indicates manufacturing growth, so this means that the sector and the overall economy was still growing in June, but at a slower pace.
ISM: ” The lower reading for the PMI came from a slowing in the New Orders and Production Indexes. We are now 11 months into the manufacturing recovery, and given the robust nature of recent growth, it is not surprising that we would see a slower rate of growth at this time. The sector appears to be solidly entrenched in the recovery. Comments from the respondents remain generally positive, but expectations have been that the second half of the year will not be as strong in terms of the rate of growth, and June appears to validate that forecast.
ISM’s New Orders Index registered 58.5 percent in June, which is a decrease of 7.2 percentage points when compared to the 65.7 percent reported in May. This is the 12th consecutive month of growth in the New Orders Index.
ISM’s Employment Index registered 57.8 percent in June, which is 2 percentage points lower than the 59.8 percent reported in May. This is the seventh consecutive month of growth in manufacturing employment.
Manufacturers’ inventories contracted in June for the third consecutive month as the Inventories Index registered 45.8 percent. The index is 0.2 percentage point higher than the 45.6 percent reported in May.”