The U.S. manufacturing sector contracted for the third consecutive month in June, according to a report released by the Institute for Supply Management (ISM).
The ISM manufacturing purchasing managers’ index (PMI) stood at 48.5 percent in June, down 0.2 percentage points from 48.7 percent in May. The market expectation for the index, based on responses from purchasing and supply executives at over 400 industrial firms, was 49.2 percent. A reading above 50 percent indicates growth, while a figure below that level signals contraction.
This marked the 19th contraction in the manufacturing sector over the last 20 months.
Weak demand and output
“U.S. manufacturing activity continued in contraction at the close of the second quarter,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee. “Demand was weak again, output declined, and inputs stayed accommodative.”
“Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions,” added the economist.
Last week, data showed that the real gross domestic product (GDP) in the U.S. increased at an annual rate of 1.4 percent in the first quarter of 2024.
Meanwhile, real GDP increased 3.4 percent in the fourth quarter of 2023, the Bureau of Economic Analysis said.
Recent GDP data
The latest Q1 GDP projection is higher than the 1.3 percent estimate issued last month.
“The upward revision primarily reflected a downward revision to imports, which are a subtraction in the calculation of GDP, and upward revisions to non-residential fixed investment and government spending. These revisions were partly offset by a downward revision to consumer spending,” the bureau said.
Changes in GDP components
Compared to the fourth quarter, the deceleration in real GDP primarily reflected decelerations in consumer spending, exports, and state and local government spending, and a downturn in federal government spending. These movements were partly offset by an acceleration in residential fixed investment. Imports were higher.
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