Manufacturers have a right to be optimistic as the Purchasing Managers Index (PMI) showed expansion of economic activity in June for the 23rd consecutive month, according to the Institute of Supply Management's Manufacturing Report on Business. The PMI registered 55.3%, an increase of 1.8 percentage points from May, indicating expansion in the manufacturing sector. The baseline number is 50, with any figure above 50 indicating an expansion, and below 50 a contraction.
Both New Orders and Production were up "modestly" from May, and employment showed continued strength with an increase of 1.7 percentage points to 59.9%. The rate of increase in raw material prices slowed for the second consecutive month, dropping 8.5 percentage points in June to 68%. "This follows a similar reduction of 9 percentage points in the Prices Index in May, and is the lowest figure since August 2010 when the index registered 61.5%," said Bradley J. Holcomb, chair of the ISM's Manufacturing Business Survey Committee. "While the rate of price increases has slowed and the list of commodities up in price has shortened, commodity and input prices continue to be a concern across several industries."