Activity in the US manufacturing sector contracted in June for an eighth consecutive month, as demand, production and employment shrank on the back of aggressive interest rate increases from the Federal Reserve aimed at reining in inflation.
The Institute for Supply Management (ISM) factory purchasing managers' index (PMI) registered 46 in June, down from 46.9 in May. The PMI has fallen every month since June 2022 and registered readings below 50, which signals a contraction, since November.
The June composite index reading "reflects companies continuing to manage outputs down as softness continues and optimism about the second half of 2023 weakens," ISM said.
The new orders index in June rose by three points to 45.6, signaling a diminishing pace of contraction.
The Fed in June paused its rate increases after 10 consecutive moves that raised its target by 5 percentage points in the steepest pace of rate hikes since the 1980s. While manufacturing has stumbled and housing is in a downturn, the labor market remains robust and the overall economy grew at a better-than-expected 2pc annual rate in the first quarter.
The ISM production index fell to 46.7 in June from 51.1 in May, swinging into contraction. The prices index fell to 41.8 in June from 44.2.
The new exports index fell to 47.3 while the new imports index rose to 49.3
The employment index fell by 3.3 points to 48.1, slipping into contraction.
The supplier deliveries index of 45.7 is 2.2 points higher than May's reading of 43.5, which was the lowest since 2009. Supplier deliveries is the only ISM factory index measure that is inverted, with readings above 50 signaling slower deliveries as the economy improves.
