ISM: Manufacturing Back to Growth for June

Manufacturing growth was back for June, according to an Institute for Supply Management report released today.

After May's index reading dipped to 49%, the first contraction since November 2012, June's index clocked in at 50.9%. Based on surveys of purchasing managers, a reading above 50% indicates that the manufacturing economy is generally expanding, while below 50% indicates that it is generally contracting.

Market analysts had expected a June turnaround, but their 50.5% estimate proved slightly too conservative.

Source: Author, data from ism.ws. 

On a component-by-component basis, exports and production made the largest gains, up 3.5 and 4.8 percentage points, respectively. New orders increased 3.1 percentage points to 51.9% from May's contracting levels.

As a potential sign of slow-to-respond or less-than-optimistic manufacturers, several backbone components slowed in June. After expanding in May, employment dropped 1.4 percentage points to 48.7%. Customers' inventories, at 46% for May, fell another 1.0 percentage point to 45%. Order backlogs also fell 1.5 points to 46.5%.

Twelve of the 18 reporting manufacturing industries reported growth, with furniture and apparel leading the improvement. Meanwhile, textiles, transportation, chemical products, and computer & electronics all reported contractions.

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