Manufacturing Expands for 11th Straight Month
Economic activity in the manufacturing sector expanded in June for the 11th consecutive month, and the overall economy grew for the 14th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business from the Institute for Supply Management, Tempe, Ariz. Thirteen of the 18 manufacturing industries reported growth in June, including fabricated metal products and miscellaneous manufacturing.
The manufacturing sector continued to grow during June; however, the rate of growth as indicated by the PMI slowed when compared to May. The lower reading for the PMI came from a slowing in 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,” says Norbert J. Ore, chair of ISM’s Manufacturing Business Survey Committee.
Manufacturing continued to grow in June as 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.
A PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 14th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 11th consecutive month.
“The past relationship between the PMI and the overall economy indicates that the average PMI for January through June, 58.5 percent, corresponds to a 5.5 percent increase in real gross domestic product,” Ore says.
ISM’s New Orders Index registered 58.5 percent in June, a decrease of 7.2 percentage points when compared to the 65.7 percent reported in May. This is the 12th consecutive month of growth in the New Orders Index. Fabricated metal products reported growth in orders in June, but a decrease was reported by miscellaneous manufacturing.
ISM’s Production Index registered 61.4 percent in June, a decrease of 5.2 percentage points from the May reading of 66.6 percent. Growth was reported by the fabricated metal products industry, though a decline in production was felt in miscellaneous manufacturing.