U.S. Manufacturing Remains in Contraction

The Manufacturing PMI was 49% in June, indicating contraction for the fourth straight month but with little improvement.

Manufacturing activity in the U.S. contracted for the fourth consecutive month in June, with the ISM Manufacturing PMI rising slightly to 49%, up from 48.5% in May. While this still points to a contraction, the broader U.S. economy marked its 62nd month of expansion.

Key Index Movements

New Orders continued to decline for the fifth month, falling to 46.4%
Production returned to growth at 50.3%
Prices surged further to 69.7%
Employment slipped again to 45%
Supplier Deliveries slowed marginally to 54.2%
Inventories contracted less, coming in at 49.2%
New Export Orders and Imports posted meaningful improvements

Sector Breakdown

About 46% of manufacturing GDP contracted in June, an improvement from 57% in May. However, 25% of GDP showed strong contraction (PMI ≤ 45%), up from 5%. Notably, four of the six largest manufacturing sectors expanded in June, compared to two in the prior month.

Industries Reporting Growth

Growth was observed across a variety of industries, including apparel, petroleum and coal products, nonmetallic mineral products, and miscellaneous manufacturing. Additional gains were seen in furniture and related products, computer and electronic products, machinery, food, beverage, and tobacco products, and electrical equipment and appliances.

Industries in Contraction

Sectors that continued to contract included textile mills, wood products, paper products, chemicals, transportation equipment, and fabricated metal products, reflecting ongoing challenges in input demand and sector-specific headwinds.

Outlook

Overall, the manufacturing picture remains mixed. Production is rebounding, supply chain disruptions are easing, and inventory levels are stabilizing. However, new orders and employment continue to lag, and inflationary pressure remains high. Many firms are showing caution in hiring, even as output conditions improve.

Source: ISM

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