US manufacturing contraction deepens in June
Written by worldOneFm on July 2, 2024
WASHINGTON — U.S. manufacturing activity edged lower in June, deepening a recent slump on continued weak demand, according to industry survey data published Monday.
The Institute for Supply Management’s (ISM) manufacturing index came in at 48.5% last month, down 0.2 percentage points from May.
The June data came in below market expectations of 49.1%, according to Briefing.com, and marked the third consecutive month where the reading was below the 50-point mark separating expansion from contraction.
“U.S. manufacturing activity continued in contraction at the close of the second quarter,” ISM survey chief Timothy Fiore said in a statement.
“Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions,” he continued, referring to the U.S. Federal Reserve’s ongoing battle against rising prices.
Inflation has fallen sharply since the Fed began hiking interest rates in 2022, but remains stuck above its long-term target of 2% — keeping borrowing costs high for both consumers and producers.
“Production execution was down compared to the previous month, likely causing revenue declines, putting pressure on profitability,” Fiore said.
June’s data extends the recent slump, which began after a positive reading in March briefly snapped 16 straight months of contraction.
The ISM survey found that eight manufacturing industries reported growth in June, including petroleum and coal products, and chemical products, while nine contracted, including textile mills, transportation equipment, and electrical equipment.
“Manufacturing activity remained in contraction territory in June, but in a sign of moderating inflation pressure, the prices paid component fell 4.9 points,” Wells Fargo economists wrote in a note to clients.
“New orders rose more than any other component but remains in contraction,” they added.
By Agence France-Presse
