U.S. ISM Manufacturing Index Falls to the Lowest Level Since May ’20
Summary
- 46.0 in June vs. 46.9 in May; below 50 for the eighth consecutive month.
- New orders contract for the 10th straight month; production contracts for the sixth month in seven.
- Employment contracts following two months of expansion.
- Prices index declines to a six-month low.
The ISM U.S. manufacturing PMI fell to 46.0 in June from 46.9 in May and 47.1 in April, according to the Institute for Supply Management. The June index level remained below the 50 expansion-contraction dividing line for the eighth successive month, indicating the U.S. manufacturing sector contracted at a faster pace. The latest reading was the third m/m index decline in four months to the lowest since May 2020; it was below 53.1 in June 2022 and its peak of 63.8 in March 2021. The Action Economics Forecast Survey had expected 47.3 for June.
The production index dropped to 46.7 in June after rising to an expansion-level 51.1 in May, suggesting production contracted for the sixth time in seven months to the lowest level since May 2020. It was below 54.4 in June 2022 and a high of 67.0 in March 2021. The employment index fell to 48.1 in June after increasing to 51.4 in May, indicating employment contracted for the first time since March. The index was also at 48.1 in June 2022 but down from a high of 56.9 in March 2021. A lessened 15.5% (NSA) of respondents reported higher employment in June while an increased 16.4% reported less hiring.
The new orders index rebounded to 45.6 in June from 42.6 in May, indicating new orders contracted for the 10th consecutive month but at a slightly less severe pace; it was down from 50.0 in June last year. Nearly eighteen percent (NSA) of respondents reported higher new orders while 24.6% reported a decline. The inventory index fell to 44.0 in June from 45.8 in May, showing inventories contracted for the fourth straight month to the lowest level since January 2014. It was down from 55.7 in June 2022 and a high of 57.0 in November 2021. The supplier deliveries index increased to 45.7 in June from 43.5 in May, indicating the delivery performance of suppliers to manufacturing organizations was faster for the ninth successive month.
The prices paid index fell to 41.8 (NSA) in June from 44.2 in May. It was slightly above a low of 39.4 in December 2022 but well below 78.5 in June 2022 and a high of 92.1 in June 2021. A lessened 11.2% (NSA) of respondents reported higher prices while an increased 27.7% reported price declines.
In other ISM series not included in the composite index, the new export orders index fell to 47.3 in June after increasing to the break-even level of 50.0 in May, indicating new export orders contracted for the 10th time in 11 months. It was down from 50.7 in June 2022 and a high of 57.1 in February 2022. The imports index increased to 49.3 in June after falling to 47.3 in May, albeit remaining in a contraction territory for the eighth straight month and down from 50.7 in June 2022 and a high of 61.0 in June 2021. The order backlog index rebounded to 38.7 in June from 37.5 in May, indicating falling backlog levels for the ninth consecutive month.
The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver's AS1REPNA database.
Winnie Tapasanun
AuthorMore in Author Profile »Winnie Tapasanun has been working for Haver Analytics since 2013. She has 20+ years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations. Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia. Winnie is bilingual in English and Thai with competency in French. She loves to travel (~30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.
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