Although the ISM survey data is consistent with a U.S. economy in recession, "hard data" shows the country's economy is still chugging along and softening price pressures present a silver lining. PHOTO courtesy PLZ.
Economic activity in the U.S. manufacturing sector contracted in June for the eighth consecutive month following a 28-month period of growth, say the nation’s supply executives in the latest Manufacturing ISM Report On Business.
Of the six biggest manufacturing industries, only one — Transportation Equipment — registered growth in June.
Manufacturing, which accounts for 11.1% of the U.S. economy, contracted at a 5.3% annualized rate in the first quarter, government data showed.
“Demand remains weak, production is slowing due to lack of work, and suppliers have capacity. There are signs of more employment reduction actions in the near term. Seventy-one percent of manufacturing gross domestic product (GDP) contracted in June, down from 76 percent in May. More industries contracted strongly, however, as the share of manufacturing GDP registering a composite PMI calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 44 percent in June, compared to 31 percent in May,” says Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.
At face value, the ISM survey is consistent with an economy that is in recession, points out a report for Reuters, but adds that “hard data” such as nonfarm payrolls, first-time applications for unemployment benefits and housing starts, suggest the U.S. economy continues to grind along.
The other silver lining is that price pressures are abating.
