Manufacturing PMI Contracts In June At 49 Percent
down of manufacturing inventories have eased. Of the six biggest manufacturing industries, four (Petroleum & Coal Products; Computer & Electronic Products; Machinery; and Food, Beverage & Tobacco Products) registered growth,” says Spence. A reading above 50 percent indicates that the manufacturing sector is generally expanding; below 50 percent indicates that it is generally contracting. “A Manufacturing PMI above 42.3 percent, over a peri- od of time, generally indicates an expansion of the overall economy. As such, the June Manufacturing PMI indicates the overall economy grew for the 62nd straight month af- ter contracting in April 2020. “The past relationship between the Manufacturing PMI and the overall economy indicates that the June reading (49 percent) corresponds to a change of plus-1.9 percent in real gross domestic product (GDP) on an annualized basis,” says Susan Spence, MBA, Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.
The US manufacturing sector contracted in June for the fourth consecutive month after two months of expansion preceded by 26 months of contraction, according to the nation’s supply executives in the latest Manufacturing ISM Report On Business. “The Manufacturing PMI (Purchasing Managers’ Index) registered 49 percent, 0.5 percentage point higher com- pared to the 48.5 percent reported in May. Of the five sub- indexes that directly factor into the Manufacturing PMI, two (Production and Supplier Deliveries) were in expansion ter- ritory, up from one in May. The slowing of supplier deliver- ies eased month over month, with a 1.9-percentage point improvement, indicating that port congestion and a draw-
“ISM’s New Orders Index contracted in June for the fifth consecutive month after three consecutive months of expansion, registering 46.4 percent, a decrease of 1.2 percentage points compared to May’s figure of 47.6 percent. This reading is be- low the 12-month moving average (48.4 percent) for the New Orders Index, which hasn’t indicated consistent growth since a 24-month streak of expansion ended in May 2022. Panelists noted continued weak demand, with a 1-to-1.7 ratio of pos- itive comments to those expressing con- cern about near-term demand. Overall, new orders continue to slow, as which par- ty will pay for potential tariff costs is still the prime issue in negotiations between buyers and sellers,” said Spence. “The seven manufacturing industries reporting growth in new orders in June are: apparel, leather and allied products; petroleum and coal products; furniture and related products; nonmetallic mineral products; miscellaneous manufacturing; food, beverage and tobacco products; and computer and electronic products. The seven industries reporting a decline in new orders in May, in order, are: Pa- per Products; Textile Mills; Transportation Equipment; Chemical Products; Electrical Equipment, Appliances & Components; Machinery; and Fabricated Metal Products. “The Production Index entered ex- pansion territory for the first time in four months in June, registering 50.3 percent, 4.9 percentage points higher than the May reading of 45.4 percent. Prior to the read- CONTINUED ON PAGE 12
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July 21, 2025
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