U.S. ISM Factory Index Edges Higher in June
by:Tom Moeller
|in:Economy in Brief
Summary
- Reading remains below expansion level for fourth straight month.
- Production & inventory readings improve; new orders & employment weaken.
- Prices index remains near three-year high.
The ISM Purchasing Managers Index of activity in the manufacturing sector improved to 49.0 in June from 48.5 during May and from 48.7 in April. The index stood below the recent high of 50.9 in January, but above a low of 46.9 in October of last year. A level of 50 is the break-even point between a rising and falling level of activity. The Action Economics Forecast Survey expected a reading of 49.6 for June. The series reached a monthly high of 63.8 in March 2021.
Of the five component indexes, two improved m/m. The June production index rose to 50.3 from 45.4 in May. It was the highest level in four months. Twenty one percent (NSA) of respondents reported higher production while 18.7% reported lower. The inventory series improved to 49.2 from 46.7 in May. Sixteen percent (NSA) of respondent reported higher inventories while 19.5% reported lower.
Offsetting these increases, the new orders series declined to 46.4 from 47.6 in May. It was below the high of 55.1 reached in January. Twenty-one percent (NSA) of respondents reported higher new orders while 27.3% indicated lower. The employment series fell to 45.0 from 46.8 in May. It remained below a January high of 50.3. Ten percent (NSA) of respondents reported higher employment while 17.5% reported less. The supplier delivery series eased to 54.2 last month from 56.1 in May. Fifteen percent (NSA) of respondents indicated slower delivery speeds while 6.3% indicated faster speeds.
The prices index, which is not part of the composite series, improved to 69.7 (NSA) in June, and reversed its decline to 69.4 in May. It remained up from a December 2022 low of 39.4. An increased 45.6% (NSA) of respondents reported higher prices last month, while a steady 6.3% reported lower prices.
In other series, the export orders reading surged to 46.3 in June from 40.1 in May. It remained below its high of 52.4 in January. The imports index also rose sharply to 47.4, reversing its decline to 39.0 in May. The order backlog reading declined to 44.3 (NSA) last month from 47.1 in May. It remained well above a low of 37.5 in May 2023.
The ISM figures are based on responses from over 400 purchasing executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These indexes are diffusion indexes where a reading above 50 indicates expansion and a reading below 50 points to contraction. The figures from the Institute for Supply Management can be found in Haver’s USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver’s AS1REPNA database.
Tom Moeller
AuthorMore in Author Profile »Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio. Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984. He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C. In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists. Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.
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