The U.S. manufacturing economy continued to cruise in June but was held back by a lack of labor availability, the Institute for Supply Management said today.
The Tempe, Ariz.-based group said its manufacturing index, known as the PMI, eased to 60.6 percent down from 61.2 percent in May.
An index level above 50 percent indicates economic expansion while below that mark shows contraction. June was the 13th consecutive month of growth. The PMI has been above 60 percent for six of the past seven months.
The index has averaged 59.1 percent the past 12 months. The PMI is a leading economic indicator and a barometer of where manufacturing is headed.
However, the institute said manufacturers are having trouble attracting and retaining workers. Without that headwind, economic expansion might be greater, ISM said.
“The need for labor continues to hold back production levels,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call.
The group surveys executives in 18 industries to compile the index. In June, 17 industries reported economic expansion. No industry reported economic contraction.
ISM’s New Orders index slipped to 66 percent in June, down from 67 percent the month before. The group said 15 of 18 industries reported a gain in new orders.
The institute’s Production index improved to 60.8 percent from 58.5 percent in May. Fourteen of 18 industries reported a gain in output.
The group’s Employment Index fell to 49.9 percent in June from 50.9 percent in May. Ten of 18 industries reported job gains.