The manufacturing sector continued to exhibit weakness in June, with tepid demand, limited output, and decreasing confidence among factory executives. Despite this, there were some signs of relief as manufacturing costs were cooling, indicating a potential easing of inflation pressures.
The Institute of Supply Management (ISM) reported a manufacturing Purchasing Managers’ Index (PMI) of 48.5% in June, which was lower than May’s results and below expectations. This marked the third consecutive month of declines for the index, which has decreased in 19 of the past 20 months. Despite this, the broader economy still shows signs of expansion.
New order levels indicated a decrease in customer demand, while lower exports and backlog orders also pointed to weakening demand. High interest rates continue to pose challenges for the manufacturing sector, according to Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee.
A separate report from S&P Global Market Intelligence revealed little momentum in the sector, with manufacturing business leaders’ confidence at a 19-month low. Factors contributing to this include demand shifting from goods to services post-pandemic, as well as concerns over rising prices and interest rates.
The ISM survey also showed a decline in the prices paid index, which came in at 52.1%, and a drop in supplier price increases as measured by the S&P Global PMI. Overall, the data suggests continued weakness in the manufacturing sector
