Daily News: July 2, 2012

ISM: Manufacturing Contracts for First Time Since July 2009


Economic activity in the manufacturing sector contracted in June for the first time since July 2009. However, the overall economy grew for the 37th consecutive month, according to the latest Manufacturing ISM Report On Business.

The PMI registered 49.7%, a decrease of 3.8 percentage points from May’s reading of 53.5%, indicating contraction in the manufacturing sector for the first time since July 2009, when the PMI registered 49.2%, said Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee.

A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

The New Orders Index dropped 12.3 percentage points in June, registering 47.8% and indicating contraction in new orders for the first time since April 2009, when the New Orders Index registered 46.8%. The Production Index registered 51%, and the Employment Index registered 56.6%. The Prices Index for raw materials decreased significantly for the second consecutive month, registering 37%, which is 10.5 percentage points lower than the 47.5% reported in May. Comments from the panel range from continued optimism to concern that demand may be softening due to uncertainties in the economies in Europe and China.

Of the 18 manufacturing industries, seven reported growth in June, in the following order: Furniture & Related Products; Printing & Related Support Activities; Fabricated Metal Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Machinery; and Primary Metals.

The nine industries reporting contraction in June – listed in order – are: Nonmetallic Mineral Products; Apparel, Leather & Allied Products; Paper Products; Plastics & Rubber Products; Chemical Products; Computer & Electronic Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Transportation Equipment.

To read the full report, click here.