The Institute for Supply Management (ISM) has released its monthly Purchasing Managers Index (PMI) for June, and the story told is another positive one with the PMI at 60.2% — up from May’s reading of 58.7%.
The number is well above the reading of 50% that indicates the manufacturing economy is generally expanding. Below 50% indicates it is generally contracting.
A PMI above 50%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June PMI indicates growth for the 110th consecutive month in the overall economy, and indicates growth in the manufacturing sector for the 22nd consecutive month.
According to Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, “Comments from the panel reflect continued expanding business strength. Demand remains strong, with the New Orders Index at 60% or above for the 14th straight month, and the Customers’ Inventories Index remaining low. The Backlog of Orders Index continued to expand, reading at 60% of higher for the third consecutive month. Consumption, described as production and employment, continues to expand in spite of labor, skill and material shortages. Inputs, expressed as supplier deliveries, inventories and imports, had expansion increases, due primarily to negative supply chain issues. Lead-time extensions, steel and aluminum disruptions, supplier labor issues, and transportation difficulties continue. Export orders expanded at higher rates. Price pressure remains strong, but the index saw its first expansion softening since November 2017. Demand remains robust, but the nation’s employment resources and supply chains continue to struggle. Respondents are overwhelmingly concerned about how tariff related activity is and will continue to affect their business.”
The New Orders Index registered 63.5%, a decrease of 0.2 percentage point from the May reading of 63.7%. The Production Index registered 62.3%, a 0.8 percentage point increase compared to the May reading of 61.5%. The Employment Index registered 56%, a decrease of 0.3 percentage point from the May reading of 56.3%.
The Supplier Deliveries Index registered 68.2%, a 6.2 percentage point increase from the May reading of 62%. The Inventories Index registered 50.8%, an increase of 0.6 percentage point from the May reading of 50.2%. The Prices Index registered 76.8% in June, a 2.7 percentage point decrease from the May reading of 79.5%, indicating higher raw materials prices for the 28th consecutive month.
Of the 18 manufacturing industries, 17 reported growth in June, in the following order: Textile Mills; Wood Products; Nonmetallic Mineral Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Paper Products; Transportation Equipment; Furniture & Related Products; Machinery; Primary Metals; Miscellaneous Manufacturing; Chemical Products; Petroleum & Coal Products; and Plastics & Rubber Products. No industry reported a decrease in June compared to May.