The pace of activity in the U.S. manufacturing sector didn't deteriorate last month, but it didn't improve much either. That's the message from this morning's report on the Composite Index of activity in the factory sector. The Institute for Supply Management indicated that its index rose to 55.3 from an unrevised 53.5 in May. The latest matched the level twelve months ago and compared favorably to Consensus expectations for a decline to 52.2. The reading continued to indicate positive factory growth and was the twenty-third consecutive monthly figure above the break-even level of 50. It was up from the low of 32.5 reached in December '08.

Modest improvement was logged by each of the component series, but it was greatest for inventories where the figure of 54.1 was its highest since November. New orders, production and supplier deliveries rose just modestly. However, the greater gain in the employment series continues to indicate hiring in the factory sector. During the last ten years there has been a 91% correlation between the employment series level and the m/m change in factory sector payrolls.

The separate index of new export orders fell to 53.5, its lowest level in nearly two years. The index of prices also backpedaled to 68.0, its lowest level since August. A reduced 48% (NSA) of respondents reported higher prices while an increased 12% indicated lower prices.

The ISM figures are diffusion indexes and can be found in Haver's USECON database. The forecast data is in the AS1REPNA database.