Economists had projected that U.S. manufacturing would show a slowdown to 52 from 53.5 in May when the Institute for Supply Management released its report on July 2. In fact, the news was much worse. The ISM’s report of economic activity in the manufacturing sector contracted in June to 49.7%. This is the first time since July 2009 when the Purchasing Managers Index (PMI) registered 49.2%, that the survey has revealed a contraction.
The one bright spot is that “the Prices index for raw materials decreased significantly for the second consecutive month, registering 37%, which is 10.5 percentage points lower than the 47.5% reported in May,” commented Bradley J. Holcomb, CPSM, CPSD, chair of the ISM’s Manufacturing Business Survey Committee. “Comments from the panel range from continued optimism to concern that demand may be softening due to uncertainties in the economies in Europe and China.”