ISM: Manufacturing shrinks in June

July 2, 2012

For the first time since July 2009, the overall manufacturing sector contracted in June, according to the Institute for Supply Management’s composite index. The index — known as the PMI — fell 3.8 percentage points from May to 49.7%. A reading below 50% generally indicates contraction.

Perhaps a bigger worry, however, is a sharp drop in the component new orders index, which plunged 12.3 points from May to 47.8%. And while the production index still shows growth, the index fell 4.6 points to 51%.

“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,” said Bradley Holcomb, chairman of ISM’s Manufacturing Business Survey Committee.

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.

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