Manufacturing activity in the U.S. unexpectedly contracted at a slightly faster rate in the month of June, according to a report released by the Institute for Supply Management on Monday.
The ISM said its manufacturing PMI edged down to 46.0 in June from 46.9 in May, with a reading below 50 indicating contraction. The dip surprised economists, who had expected the index to inch up to 47.2.
“The June composite index reading reflects companies continuing to manage outputs down as softness continues and optimism about the second half of 2023 weakens,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.
The modest decrease by the headline index partly reflected a downturn in production, as the production index slid to 46.7 in June from 51.1 in May.
The employment index also fell to 48.1 in June from 51.4 in May, indicating a contraction in employment following two months of expansion.
Meanwhile, the new orders index climbed to 45.6 in June from 42.6 in May, although the reading below 50 points to a contraction for the tenth straight month.
The report also said the prices index dropped to 41.8 in June from 44.2 in June, suggesting raw materials prices decreased for the second consecutive month.
On Thursday, the ISM is scheduled to release a separate report on activity in the U.S. service sector in the month of June.
The ISM’s services PMI is expected to inch up to 50.5 in June from 50.3 in May, with a reading above 50 indicating growth.
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