Manufacturing showing slight improvement in May/June

Manufacturing during the month of June showed a slight improvement over May in the latest Institute for Supply Management’s Manufacturing Report on Business. The Purchasing Managers Index (PMI) registered 50.9%, an increase of 1.9 percentage points from May’s reading of 49.0%, indicating an expansion. The New Orders Index increased in June by 3.1 percentage points to 51.9%, also moving into the “expansion” column along with the Production Index, which increased by 4.9% to 53.4%.

In spite of this good news, the Employment Index fell to 48.7% compared to May’s reading of 50.1%, showing a contraction. The Prices Index registered 52.5%, increasing by 3 percentage points from May, indicating that overall raw materials prices increased from May. Order Backlog is contracting, falling to 46.5% from May’s 48.0%, something that manufacturers don’t like to see as it tends to be a predictor of a slowdown in future business.

Twelve of the 18 manufacturing industries tracked by the ISM reported growth in June, with both Fabricated Metal Products (including molds) and Plastics & Rubber Products near the bottom of that list. One respondent in the Fabricated Metal Products sector commented, “Business is steady. Qualified CNC machinists are hard to find,” indicating that demand for skilled employees remains strong....

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