ISM Manufacturing Signals Eighth-Straight Month of Contraction

Economics Group of Wells Fargo Bank, N.A. Summary The June ISM manufacturing report was a dud and continues to signal the sector is broadly in contraction. All of the components were below 50, and the only positive takeaway in this release is that new orders contracted at a slower rate in June. June ISM Rains on Fourth of July Parade After a string of relatively strong U.S. based data, the ISM manufacturing report on business for June was a dud. Every component of the survey slipped back below the 50-threshold designating expansion from contraction and at 46.0, the overall ISM index signaled the sector is contracting for the eighth consecutive month (chart). A scan through the selected industry comments, however, suggests things are a little less dire. Most industries reference stable demand and steady business activity. The new orders index did rise to 45.6 last month, indicating orders are contracting but at a slower rate than in May (chart). But that improvement in new orders is one of the only strings to pull on for some signs of strength in this release. Overall production registered one of the largest declines, slipping 4.4 points to 46.7 in June, marking its lowest index reading since the economy was coming out of the pandemic in May 2020. With production contracting at a faster clip last month, order backlogs rose, supplier delivery times got a bit longer and inventories slipped. READ FULL ARTICLE >>