As the overall economy continued growing for the 110th month in a row, the Institute for Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) also continued its upward swing. Reaching its 22nd month of consecutive growth, the manufacturing industry crept up another 1.5 percentage points to reach 60.2, up from May’s 58.7 reading. Respondents in 17 of the 18 industries surveyed reported growth while none reported decreases in June, and panel commenters reported “continued expanding business strength.” But what was behind this manufacturing strength?
Growth
In addition to the industry PMI and economy, seven of the report’s 10 manufacturing indexes were also in growth mode.
- While New Orders were growing, the index dropped 0.2 percentage points to 63.5, down from May’s 63.7. Although slowing, New Orders have been growing for 30 consecutive months.
- Production increased 0.8 points in June to reach 62.3, nearly a full point increase over last month’s 61.5. As the index continues growing faster, it adds another month onto its May trend of 21 in a row, reaching 22 months of growth.
- Like New Orders, Employment also saw a slight decrease in June, dropping from May’s 56.3 to 56.0, a 0.3 percentage point difference. This small negative change didn’t hurt its slowing growth trend as the index has now seen 21 months of consecutive growth.
- Similar to Production, Inventories increased 0.6 points above May’s 50.2 reading to 50.8 in June. While its growth record isn’t quite as strong as fellow indexes, Inventories has now logged six months of growth in a row.
- Although Production increased in June, the Backlog of Orders index also continued growth, albeit more slowly. The index reached 60.1 in June, a drop of 3.4 points since May’s 63.5 reading. While its current growth trend is in its 17th month, it saw the biggest percentage point drop of any index in the report.
- New Export Orders also saw an increase in June, continuing its own 28-month trend of consecutive growth. It increased 0.7 points to reach 56.3, up from 55.6 in May.
- The final growing index in June was Imports with the largest positive percentage point change in the report. In fact, the Imports index was up 4.9 points over May’s 54.1, reaching 59, and in its 17th month of growth in a row.
In addition to these growing indexes, Prices were also increasing in the June report. Although they dropped 2.7 points from May’s 79.5 reading, they were still quite high at 76.8 this month.
Too low and slowing
In contrast to growing indexes, only two fell into the slowing and too-low categories, but both saw positive percentage point changes in the June report.
- While the Supplier Deliveries index continued its 21-month slowing trend, it saw a faster rate of change in the June report, increasing 6.2 points over May’s 62 to reach 68.2.
- Again, the Customers’ Inventories index registered at too low in June, continuing its own 21st consecutive month in this trend. However, it increased 0.1 point to 39.7 over May’s 39.6.
With such continued growth in manufacturing numbers, individual survey respondents are reflecting strong demand alongside economic growth and tight shipping options with high costs. Many respondents also mentioned they have their eyes on current tariffs and future tariff threats. Only time will tell, however, whether such potential tariffs could change such a continued positive overall industry trend.