U.S. Manufacturing Sector Enters Expansion Cycle Earlier than Economists Expected Post-Coronavirus
Tempe, Arizona (PPD) — The Institute for Supply Management (ISM) Manufacturing Index (PMI) came in stronger than expected at 52.6% in June, up from 43.1% in May. This reading indicates the overall economy in expansion for the second straight month after one month of contraction that ended 131 consecutive months of growth.
Forecasts for the PMI ranged from a low of 46.0 to a high of 51.5, and the consensus forecast was 49.0.
The reading also indicates the U.S. manufacturing sector entered an expansion cycle earlier than expected after the contraction caused by the efforts to mitigate the spread of coronavirus (COVID-19). The rate of increase for the PMI is a level not seen since August 1980.
Comments from the panel were positive (1.3 positive comments for every one cautious comment), reversing the cautious trend which began in March. The manufacturing sector is reversing the heavy contraction of April, with the PMI® increasing month-over-month at a rate not seen since August 1980, with several other indexes also posting gains not seen in modern times.
| Index | Series Index Jun | Series Index May | Percentage Point Change | Direction | Rate of Change | Trend* (Months) |
|---|---|---|---|---|---|---|
| PMI® | 52.6 | 43.1 | +9.5 | Growing | From Contracting | 1 |
| New Orders | 56.4 | 31.8 | +24.6 | Growing | From Contracting | 1 |
| Production | 57.3 | 33.2 | +24.1 | Growing | From Contracting | 1 |
| Employment | 42.1 | 32.1 | +10.0 | Contracting | Slower | 11 |
| Supplier Deliveries | 56.9 | 68.0 | -11.1 | Slowing | Slower | 8 |
| Inventories | 50.5 | 50.4 | +0.1 | Growing | Faster | 2 |
| Customers’ Inventories | 44.6 | 46.2 | -1.6 | Too Low | Faster | 45 |
| Prices | 51.3 | 40.8 | +10.5 | Increasing | From Decreasing | 1 |
| Backlog of Orders | 45.3 | 38.2 | +7.1 | Contracting | Slower | 4 |
| New Export Orders | 47.6 | 39.5 | +8.1 | Contracting | Slower | 4 |
| Imports | 48.8 | 41.3 | +7.5 | Contracting | Slower | 5 |
| OVERALL ECONOMY | Growing | Faster | 2 | |||
| Manufacturing Sector | Growing | From Contracting | 1 |
*Number of months moving in current direction.
