U.S. manufacturing contraction continues amid low input prices
(MENAFN) In June, U.S. manufacturing contracted for the third consecutive month, as indicated by a drop in an index measuring the prices paid by factories for inputs, which hit a six-month low amid weak demand for goods. This trend suggests that inflation may continue to ease. The Institute for supply Management (ISM) reported on Monday that its purchasing managers' index (PMI) for the manufacturing sector decreased to 48.5 points in June from 48.7 points in May. The 50-point mark separates growth from contraction, and the manufacturing sector, which constitutes 10.3 percent of the U.S. economy, remained below this threshold.
Economists had anticipated the PMI to rise to 49.1 points, but the sector continues to struggle under the weight of higher interest rates and decreased demand for goods. Recent government data indicated that the manufacturing sector contracted by about 4.3 percent year-on-year in the first quarter, primarily driven by a decline in durable goods production.
Despite this overall contraction, there were some positive signs. The ISM's new future orders sub-index rose to 49.3 in June from 45.4 in April, suggesting a potential improvement in future demand. However, the production sub-index fell to 48.5 from 50.2 points in May, and the factory employment index also declined after a brief rebound in May. Factories are responding to the downturn by reducing their workforce through layoffs and hiring freezes, reflecting the ongoing challenges faced by the sector.
MENAFN02072024000045015682ID1108397225
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.