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Manufacturing Surges in June, ISM Says

Bill Koenig
By Bill Koenig Senior Editor, SME Media

US manufacturing surged in June as gains in new orders spurred increases in output and employment, the Institute for Supply Management (Tempe, AZ) said today.

The institute’s PMI, which measures economic activity in manufacturing, advanced to 57.8% last month, up from 54.9% in May, according to a monthly report. It was the 10th consecutive month of growth.

“It was a really strong performance,” Timothy R. Fiore, chair of ISM’s Business Survey Committee, said on a conference call.

“As long as new orders continue to come in…there’s no reason this shouldn’t continue,” Fiore said.

Fifteen of 18 industries reported economic expansion. They included furniture, machinery, transportation equipment, fabricated metal products, miscellaneous manufacturing and petroleum and coal products. Three industries reported contraction: apparel, textiles and primary metals.

The ISM report is based on a survey of 350 purchasing and supply executives. A reading above 50% indicates expansion and below 50% contraction. The PMI has averaged 54.3% the past 12 months and 56.4% for the first half of 2017. The index hasn’t been below 50% since August.

‘Has to Respond’

New orders have driven the economic expansion in manufacturing, Fiore said.

“If new orders continue to come in, the manufacturing base has to respond,” he said.

ISM’s New Orders Index advanced to 63.5% in June, up from 59.5% in May. Fifteen industries reported increases in orders, including machinery, transportation equipment, fabricated metal products, miscellaneous manufacturing and petroleum and coal products.

As a result, ISM’s Production and Employment indexes also advanced.

The Production Index rose to 62.4% last month from 57.1% in May. Fourteen industries reported production increases while two, apparel and textiles, reported cutbacks in output.

The group’s Employment Index advanced to 57.2% in June from 53.5% the month before. Fourteen industries reported job increases. Two, apparel and petroleum and coal products, reported job reductions.

Some companies are adding shifts “which is very positive,” Fiore said.

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