Manufacturing Contracts (CONT’D FROM PAGE 10)
ings of expansion in January and February, the index was in contraction territory for eight months, with the previous reading above 50 percent in April 2024 (50.7 percent). “Production levels in June, while improved, are still frag- ile as order books remain weak and new orders continue to decline. Panelists noted reduced output in production due to business-climate uncertainty, with a 1-to-1.5 ratio of positive to negative comments,” said Spence. An index above 52.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Pro- duction figures. “The six industries reporting a decrease in production in June, in order, are: textile mills; paper products; wood products; nonmetallic mineral products; chemical prod- ucts; and food, beverage and tobacco products. “Delivery performance of suppliers to manufacturing or- ganizations was slower for the seventh consecutive month in June, with the Supplier Deliveries Index registering 54.2 percent, a 1.9-percentage point decrease compared to the reading of 56.1 percent reported in May. This index read- ing, which indicates slower but slightly improved delivery performance, indicates the easing of port congestion once the pull-forward demand was largely completed in May. “The findings in June suggest the deliveries continued to be strained because suppliers and panelists’ compa- nies were haggling over who pays for applied tariffs,” said Spence. “A reading below 50 percent indicates faster de- liveries, while a reading above 50 percent indicates slow- er deliveries. The only industry reporting faster supplier deliveries in June is Paper Products. “ISM’s Customers’ Inventories Index registered a read- ing of 46.7 percent in June, an increase of 2.2 percentage points compared to the reading of 44.5 percent in May. “Customers’ inventory levels in June continued to con- tract but moved closer to ‘about right’ territory. Panelists reported that the amounts of their companies’ products in their customers’ inventories continue to suggest a de- mand level that remains positive for future production,” says Spence. “The four industries reporting customers’ inventories as too high in June are: textile mills; paper products; comput- er and electronic products; and transportation equipment. “No industries reported paying decreased prices for raw materials in June. ISM’s Backlog of Orders Index reg- istered 44.3 percent, a decrease of 2.8 percentage points compared to the May reading of 47.1 percent, indicating order backlogs contracted for the 33rd consecutive month after a 27-month period of expansion. “The 12 industries reporting lower backlogs in June are: paper products; nonmetallic mineral products; textile mills; plastics and rubber products; wood products; fabri- cated metal products; primary metals; chemical products; electrical equipment, appliances and components; ma- chinery; transportation equipment; and food, beverage and tobacco products.
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July 21, 2025
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