US Manufacturing Extends Slump; Inflation Pressures Ebbing
US Manufacturing Extends Slump; Inflation Pressures Ebbing
U.S. manufacturing contracted for a third straight month in June as demand remained subdued, while a drop in a measure of prices paid by factories for inputs to a six-month low suggested that inflation could continue to subside. Manufacturing is being pressured by higher interest rates and softening demand for goods, though business investment has largely held up.
The ISM's manufacturing PMI slipped to 48.5 last month from 48.7 in May. A PMI reading above 50 indicates growth in the manufacturing sector, which accounts for 10.3% of the economy. The PMI remains above the 42.5 level, which the ISM says over a period indicates an expansion of the overall economy.
Economists polled by Reuters had forecast the PMI to climb to 49.1. It has indicated a contraction in manufacturing in 19 of the last 20 months. 62% of manufacturing gross domestic product contracted, up from 55% in May.
The share of sector GDP registering a composite PMI at or below 45 — a good barometer of overall manufacturing weakness — jumped to 14% from 4% in the prior month. Eight manufacturing industries, including primary metals and chemical products, reported growth. Machinery, transportation equipment, electrical equipment, appliances and components as well as computer and electronic products were among the nine industries that contracted
The ISM survey's forward-looking new orders sub-index rose to a still-subdued 49.3 reading from 45.4 in May. Output at factories decreased for the first time since February. The production sub-index fell to 48.5 from 50.2 in May.
