The Institute for Supply Management released a report on Friday showing its reading on U.S. manufacturing activity fell to its lowest level in two years in the month of June.
The ISM said its manufacturing PMI slid to 53.0 in June from 56.1 in May, although a reading above 50 still indicates growth in the sector. Economists had expected the index to dip to 54.9.
With the bigger than expected decrease, the manufacturing PMI slumped to its lowest level since hitting 52.4 in June of 2020.
“The U.S. manufacturing sector continues to be powered — though less so in June — by demand while held back by supply chain constraints,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.
The bigger than expected decrease by the headline index came as the new orders index tumbled to 49.2 in June from 55.1 in May.
The employment index also fell to 47.3 in June from 49.6 in May, indicating employment in the manufacturing sector contracted for the second straight month.
“Despite the Employment Index contracting in May and June, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain, according to Business Survey Committee respondents’ comments,” Fiore said.
The report also showed the prices index slid to 78.5 in June from 82.2 in May, suggesting a continued slowdown in the pace of price growth in the sector.
Next Wednesday, the ISM is scheduled to release its report on service sector activity in the month of June. The services PMI is currently expected to edge down to 55.7 in June from 55.9 in May.
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