The manufacturing sector saw a return to growth in June with a nearly two percentage point increase reported by purchasing managers nationwide, according to the latest Report on Business from the Institute for Supply Management.
Released this week, ISM’s report revealed a Purchasing Manager’s Index (PMI) of 50.9, a 1.9% increase over May. May’s reading represented the only contraction in the manufacturing sector this year—and the first since November 2012. A PMI above 50 indicates growth in manufacturing, and a PMI below 50 indicates contraction.
The overall economy grew for the 49th straight month in June, the report also said.
ISM’s New Orders index also grew in June, increasing 3% to 51.9, and its Production Index increased nearly 5% to 53.4. On the down side, the manufacturing employment index contracted for the first time since September 2009. In addition, purchasing managers reported a rise in raw materials pricing compared to May, with the Prices Index rising 3 points to 52.5.
“Comments from the panel generally indicate slow growth and improving business conditions,” Bradley J. Holcomb, chairman of ISM’s Manufacturing Business Survey Committee said in announcing the report this week.
Purchasing managers in most industry sectors polled by ISM reported growth during the month, but there were four industries that reported contraction in June: textile mills; transportation equipment; chemical products; and computer and electronic products.
Commenting on the June ISM report, Donald A Norman, senior economist for the Manufacturers Alliance for Productivity and Innovation said: “Coupled with last week’s report on durable goods, the positive movements in ISM’s manufacturing, new orders, and export indexes provide encouraging signs that manufacturing sector activity is rebounding from its anemic pace in late winter and early spring.
“The trends are consistent with our outlook for a moderate rebound in the pace of economic growth in the second half of this year.”