ISM: Manufacturing expanded in June
Economic activity in the manufacturing sector expanded in June for the 11th consecutive month according to the Institute for Supply Management.
The PMI registered 56.2 percent, a decrease of 3.5 percentage points when compared to May's reading of 59.7 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
The lower reading for the PMI came from a slowing in the New Orders and Production Indexes.
"We are now 11 months into the manufacturing recovery, and given the robust nature of recent growth, it is not surprising that we would see a slower rate of growth at this time. The sector appears to be solidly entrenched in the recovery. Comments from the respondents remain generally positive, but expectations have been that the second half of the year will not be as strong in terms of the rate of growth, and June appears to validate that forecast," said Norbert J. Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee.
"The June ISM report on manufacturing does show some slowing from the rapid pace of expansion achieved earlier this year, but also confirms that the general trend remains positive," said Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI. "Key subindexes such as new orders, production, employment and exports eased off in June but remain supportive of growth. A sharp cooling of prices also is a harbinger of a weaker pace of growth. Inventories are still too low, up only 3 percent from the trough experienced last year, but still 14 percent below the peak in 2008, leaving ample room for strength as they are rebuilt to more normal levels.
"Weakness in Europe is clearly an issue, as U. S. exports to that region are up only 5 percent this year, compared to 37 percent for the Pacific Rim and 26 percent to Canada and Mexico," he added. "Looking ahead, we will need to see better support from domestic spending, including construction and investment, and stronger performance from key trading partners such as Europe, to sustain growth in the manufacturing sector. The commodity price weakness seen in the June ISM report unfortunately reflects weakness in Europe and China, which does not bode well for export growth."
INDUSTRIAL SUPPLY MAGAZINE
The May/June issue of Industrial Supply magazine features an in-depth cover story about GHX Industrial. Plus, we're featuring articles by contributing writers Dr. Bharani Nagarathnam and Frank Hurtte, as well as interviews with numerous product and distribution industry experts.
