ISM: Manufacturing Activity Improves in June

By July 1, 2013Economy

The Institute for Supply Management (ISM) said  that manufacturing activity improved in June, after contracting for the first time since November in May. The purchasing managers’ index (PMI) rose from 49.0 in May to 50.9 in June, suggesting very modest growth for the month. Still, it is clear that manufacturers are not seeing robust growth in output and sales either, a sign that weaknesses that we have seen since the spring are still present.

Nonetheless, both new orders and production shifted from declines in May to slight growth in June, with a pickup in exports. The largest change was for production, as that index increased from 48.6 to 53.4. Indeed, one of the commenters from the paper industry said, “June sales appear to have rebounded from what was a lackluster May.” With that said, a chemical manufacturer cautioned, “Slow growth continues to choke the recovery. We are not out of the woods by any stretch of the imagination.”

Perhaps with the latter comment in mind, the one notable area of weakness was hiring. The employment index declined from 50.1 (essentially neutral) to 48.7 (slightly negative). This suggests that there continues to be some skittishness with regard to manufacturing hiring, something that we will probably continue to see later this week when the Bureau of Labor Statistics releases the latest jobs numbers. While the consensus estimate is for roughly 165,000 net new nonfarm payroll workers, we would expect for manufacturing employment to remain weak at best.

Chad Moutray

Chad Moutray

Chad Moutray is chief economist for the National Association of Manufacturers (NAM), where he serves as the NAM’s economic forecaster and spokesperson on economic issues. He frequently comments on current economic conditions for manufacturers through professional presentations and media interviews. He has appeared on Bloomberg, CNBC, C-SPAN, Fox Business and Fox News, among other news outlets.
Chad Moutray

Leave a Reply