U.S. ISM Manufacturing PMI Eases in June; Prices Fall Sharply

The ISM Purchasing Managers Index of activity in the manufacturing sector fell to 48.5 during June after declining to 48.7 in May from 49.2 in April, according to the Institute for Supply Management. The index is down from a March high of 50.3. Remaining below 50, the index indicates a contraction in U.S. manufacturing sector activity, but the reading remained up from a low of 46.4 in June of last year. The index peaked at 64.0 in March 2021. A reading of 49.1 for last month had been expected in the Action Economics Forecast Survey.

Movement amongst the index components was mixed in June. Leading the downturn, inventories declined to 45.4 from 47.9 in May. Eleven percent (NSA) of respondents reported higher inventories while 20.8% reported lower. The production measure fell to 48.5, its lowest level in four months, after three months above the break-even level of 50. Twenty-three percent (NSA) of survey respondents reported higher output while 20.3% reported lower. Also falling, the employment index backpedaled to 49.3 in June after rising sharply during the prior three months from 45.9 in February. Seventeen percent (NSA) of respondents reported increased employment whie 17.1% indicated a decline.

Moving higher, the new orders index rose to 49.3 in June from 45.4 in May as 20.3% (NSA) of respondents indicated a rise in new orders and 20.6% reported a decline. The supplier deliveries series improved to 49.8 from 48.9, increased from a low of 43.5 in May of last year. Nine percent (NSA) of respondents indicated faster delivery speeds and 9.2% reported slower speeds.

The prices index weakened sharply to 52.1 (NSA) last month from 57.0 in May. It remained beneath the April high of 60.9 but was well above the low of 39.4 in December 2022. The index peaked at 92.1 in June 2021 and averaged 46.6 last year. A lessened 20.2% of respondents reported higher prices last month while a higher 16.0% reported price declines.

In other series, the export order index fell to 48.8 last month from 50.6 in May. It remained increased from the January 2024 low of 45.2. Ten percent (NSA) of respondents reported higher exports while 12.8% reported declines. The imports series fell sharply to 48.5 from 51.1. These readings were down from the high of 53.0 in March. The order backlog index fell to 41.7 (NSA) last month from 42.4 in May, both still above a low of 37.5 in May of last year.

The ISM figures are based on responses from over 400 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.

Anatomy of the Post-Pandemic Monetary Tightening Cycle from the Federal Reserve Bank of San Francisco can be found here.