The Institute for Supply Management (ISM) reported that manufacturing activity jumped to nearly a three-year high in June. The ISM Manufacturing Purchasing Managers’ Index increased from 54.9 in May to 57.8 in June, its strongest reading since August 2014. As such, the latest survey continued to reflect healthy gains in both demand and output, with improvements in the global economy and a more upbeat outlook helping to lift manufacturing performance in the United States. It was the 10th straight month of manufacturing growth in this report.
In June, most of the key indicators rose sharply, bouncing back from some easing in the springtime months, including new orders (up from 59.5 to 63.5), production (up from 57.1 to 62.4), exports (up from 57.5 to 59.5) and employment (up from 53.5 to 57.2). The pace of hiring in June rose to a 15-month high, and growth of export orders remained encouraging, especially given the strength of the U.S. dollar and a number of global challenges over the past two years.
Prices for raw materials continued to decelerate (down from 60.5 to 55.0), pulling back from April’s pace (70.5), which was the quickest rate since May 2011. This mirrors the slower growth in input prices in other data. Meanwhile, inventories contracted in June after expanding for two straight months in April and May (down from 51.5 to 49.0). Overall, stockpiles remain quite low, which should necessitate healthy gains in production moving forward to meet additional demand.