- The pace of contraction slowed in the month of June compared to the previous month in the middle of some encouraging signs for the manufacturing sector.
- ISM said its index of activity in the manufacturing sector rose 44.8 in June from 42.8 in May.
- A reading below 50 indicates a contraction.
- The economist came pretty much inline with the expectations of economist, who forecast a reading of 44.6
"Manufacturing continues to contract at a slower rate, but the trends in the indexes are encouraging as seven of 18 industries reported growth in June.” – Norbert J. Ore (Chair of the ISM Manufacturing Business Survey Committee)
- Turnaround in production was the most encouraging sign, with the production index jumping to 52.5 in June from 46 in May.
- With the increase, the index rose above 50 for the first time Since July 2008 and reached its highest level since January 2008.
- Employment index rose rose 40.7 in June from 34.3 in the previous month.
- Employment showed some improvement in the month, although it continued to contract.
- New orders index slipped back below 50, dipping to 49.2 in June compared to 41.1 in May
- With regards to inflation, ISM said that the prices index jumped to 50 in June from 43.5 in May, with the increase reflecting the recent increase in commodities prices.
- Inventories index fell to 30.8 in June from 32.9 in May, indicating a faster pace of contraction in inventories.
"Inventory correction should now be near its end. After a violent draw-down of inventories, firms will have to restock in the not-too-distant future." – Bernd Weidensteiner (Analyst, Commerzbank)
- On top of that, government efforts to revive auto sales may give manufacturing and the economy a boost in the third quarter. The “cash for clunkers” bill that passed congress in June gives consumers as much as $4,500 to trade in their old cars for more fuel-efficient vehicles.
| ORDER BACKLOG INDEX 47.5 VS 48.0 |
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