- The Institute for Supply Management’s manufacturing index fell to 53% from 56.1% in May.
- That was the lowest level for the index since June 2020 during the pandemic downturn.
- The drop in the overall index reflected new orders entering contraction territory, falling a whopping 5.9 points to 49.2%.
American manufacturing growth slowed in June as new orders contracted, despite price increases showing signs of slowing, according to an industry survey released Friday.
The Institute for Supply Management reported that its manufacturing index fell to 53% from 56.1 percent in May, indicating that growth has slowed significantly despite remaining above the 50% threshold indicating expansion for the 25th consecutive month.
That was the lowest level for the index since June 2020 during the pandemic downturn.
Prices showed signs of easing, but the drop in the overall index reflected new orders entering contraction territory, falling a whopping 5.9 points to 49.2 percent, the report said.
“The US manufacturing sector continues to be powered — though less so in June — by demand while held back by supply chain constraints,” ISM manufacturing survey chair Timothy Fiore said.
“Sentiment remained optimistic regarding demand.”
Employment contracted further, dropping 2.3 points to 47.3, but Fiore said respondents indicated they are having better luck addressing the worker shortage.
Still, problems with supplier deliveries, inventories and imports “continued to constrain production expansion but to a lesser extent compared to May.”
Draconian Covid-19 regulations in China and Russia’s war in Ukraine have been exacerbating shortages experienced in recent months of the pandemic recovery, fueling the global inflation surge.
However, the ISM survey showed the prices index fell for the third straight month to a still-high 78.5 percent in sign pressure may be easing as the Federal Reserve raises interest rates aggressively to tamp down inflation.
The prices index has been above 70 percent in 18 of the past 19 months.
But Fiore cautioned that supply chain issues and “instability in global energy markets” were weighing on manufacturers.
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