ISM' s June Manufacturing PMI registered 53%, as reported on July 1. This number is down 3.1 percentage points from May which was 56.1%. While this indicates that expansion has continued for 25 months, it's the lowest reading since June 2020 when it was 52.4%, according to Timothy R. Fiore Chair of the Institute for Supply Management Manufacturing Business Survey Committee
Other index numbers are as follows:
- New Orders Index reading of 49.2% is 5.9 percentage points lower than the 55.1% recorded in May.
- Production Index reading of 54.9% is a 0.7-percentage point increase compared to May's figure of 54.2%.
- Prices Index registered 78.5%, down 3.7 percentage points compared to the May figure of 82.2%.
- Backlog of Orders Index registered 53.2%, 5.5 percentage points below the May reading of 58.7%.
- Employment Index contracted for a second straight month at 47.3%, 2.3 percentage points lower than the 49.6% recorded in May.
- Supplier Deliveries Index reading of 57.3% is 8.4 percentage points lower than the May figure of 65.7%.
- Inventories Index registered 56%, 0.1 percentage points higher than the May reading of 55.9%.
- New Export Orders Index reading of 50.7% is down 2.2 percentage points compared to May's figure of 52.9%.
- Imports Index climbed into expansion territory, up 2 percentage points to 50.7% from 48.7% in May.
"The U.S. manufacturing sector continues to be powered — though less so in June — by demand while held back by supply chain constraints," said Fiore." "Manufacturing performed well for the 25th straight month. There are signs of new order rate softening — cited in 17% of general comments, compared to 10% in May — but the root cause is difficult to determine: (1) demand reduction, (2) adjustment for excessive lead times, causing order rate adjustments or (3) a combination of both. Employment activity remain strongly positive in spite of the uncertainty with new order rates."
What Respondents are Saying
- "Backlog is high, but incoming orders slowing this month." [Computer & Electronic Products]
- "New orders have stabilized and not increased." [Chemical Products]
- "Continued strong demand for transportation equipment." [Transportation Equipment]
- "Business is slower than expected in volume, but revenue is on pace with our budget. Ocean freight costs are finally beginning to fall a bit. We are already receiving large orders for the fall, which is encouraging." [Food, Beverage & Tobacco Products]
- "Continued tightening of market, rising gas/diesel prices, and limited labor/drivers equates to increased cost. Few markets showing a leveling off." [Petroleum & Coal Products]
- "Our suppliers are experiencing a softening of orders. We are still running at the same high level we did throughout 2021 and in early 2022." [Machinery]
- "Business is still steady. Some customers are pushing orders out because they have too much inventory. We are able to backfill the pushed orders from customers that want theirs earlier, so we aren't losing capacity." [Fabricated Metal Products]
- "We are hearing from customers that their inventories are high, and sales are coming down. We expect orders to decline on the coming months until inventories are leveled properly against demand." [Apparel, Leather & Allied Products]
- "Orders and production continue to be strong, but material availability is holding us back. Cannot run enough hours to eat into the backlog." [Electrical Equipment, Appliances & Components]
- "Supply seems to be settling to some degree, but what it is settling into remains in question. Diminishing cost and (continued) limited supply in aluminum make for an interesting combination. There are actually more questions than answers this month." [Primary Metals]
