The ISM Manufacturing PMI in the US fell to 51.7 in June 2019 from 52.1 in the previous month, beating market expectations of 51.0. Still, the latest reading pointed to weakest pace of expansion in the manufacturing sector since October 2016.
The new orders index dropped 2.7 points from a month earlier to 50.0, the lowest since December 2015, and the prices paid index fell 5.3 points to 47.9, the weakest since February 2016. In addition, decreases were also recorded for supplier deliveries (-1.3 points to 50.7) and inventories (-1.8 points to 49.1). Meanwhile, the production index gained 2.8 points to 54.1 and the employment index increased 0.8 points to 54.5.
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“Comments from the panel reflect continued expanding business strength, but at soft levels; June was the third straight month with slowing PMI® expansion. Demand expansion ended, with the New Orders Index recording zero expansion, the Customers’ Inventories Index remaining at a too-low level, and the Backlog of Orders Index contracting for the second straight month. New export orders remain weak. Consumption (measured by the Production and Employment indexes) continued to expand, resulting in a combined increase of 3.6 percentage points. Inputs — expressed as supplier deliveries, inventories and imports — were lower this month, due to inventory contraction and suppliers continuing to deliver faster, resulting in a combined 3.1-percentage point reduction in the Supplier Deliveries and Inventories indexes. Imports registered zero expansion. Overall, inputs indicate (1) supply chains are responding faster and (2) supply managers are again closely watching inventories. Prices contracted for the first time since February.
“Respondents expressed concern about U.S.-China trade turbulence, potential Mexico trade actions and the global economy. Overall, sentiment this month is evenly mixed,” says Fiore.
Of the 18 manufacturing industries, 12 reported growth in June, in the following order: Furniture & Related Products; Printing & Related Support Activities; Textile Mills; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Chemical Products; Computer & Electronic Products; Paper Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; and Machinery. The five industries reporting contraction in June are: Apparel, Leather & Allied Products; Primary Metals; Wood Products; Transportation Equipment; and Fabricated Metal Products.