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PMI® at 52.6% June 2020 Manufacturing ISM® Report On Business®New Orders and Production Growing; Employment Contracting Supplier Deliveries Slowing at Slower Rate; Backlog Contracting Raw Materials Inventories Growing; Customers' Inventories Too Low Prices Increasing; Exports and Imports Contracting TEMPE, Ariz., July 1, 2020 /PRNewswire/ -- Economic activity in the manufacturing sector grew in June with the overall economy notching a second month of growth after one month of contraction, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®. The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: "The June PMI® registered 52.6 percent, up 9.5 percentage points from the May reading of 43.1 percent. This figure indicates expansion in the overall economy for the second straight month after April's contraction, which ended a period of 131 consecutive months of growth. The New Orders Index registered 56.4 percent, an increase of 24.6 percentage points from the May reading of 31.8 percent. The Production Index registered 57.3 percent, up 24.1 percentage points compared to the May reading of 33.2 percent. The Backlog of Orders Index registered 45.3 percent, an increase of 7.1 percentage points compared to the May reading of 38.2 percent. The Employment Index registered 42.1 percent, an increase of 10 percentage points from the May reading of 32.1 percent. The Supplier Deliveries Index registered 56.9 percent, down 11.1 percentage points from the May figure of 68 percent. "The Inventories Index registered 50.5 percent, 0.1 percentage point higher than the May reading of 50.4 percent. The Prices Index registered 51.3 percent, up 10.5 percentage points compared to the May reading of 40.8 percent. The New Export Orders Index registered 47.6 percent, an increase of 8.1 percentage points compared to the May reading of 39.5 percent. The Imports Index registered 48.8 percent, a 7.5-percentage point increase from the May reading of 41.3 percent. "June signifies manufacturing entering an expected expansion cycle after the disruption caused by the coronavirus (COVID-19) pandemic. 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. Demand expanded, with the (1) New Orders Index growing at a respectable level, supported by New Export Orders Index contraction softening; (2) Customers' Inventories Index returning to a level considered a positive for future production, and (3) Backlog of Orders Index softening, although still contracting. Consumption (measured by the Production and Employment indexes) contributed positively (a combined 34.1-percentage point increase) to the PMI® calculation, with most companies' employees returning to work in June. Inputs — expressed as supplier deliveries, inventories and imports — weakened, due to supplier delivery issues abating and import levels improving. Inventory levels reached parity with supply and demand. Inputs contributed negatively (a combined 11-percentage point decrease) to the PMI® calculation but were more than offset by the demand and consumption improvement. (The Supplier Deliveries and Inventories indexes directly factor into the PMI®; the Imports Index does not.) Prices entered expansion again, but at marginal levels, supporting a positive outlook. "As predicted, the growth cycle has returned after three straight months of COVID-19 disruptions. Demand, consumption and inputs are reaching parity and are positioned for a demand-driven expansion cycle as we enter the second half of the year. Among the six biggest industry sectors, Food, Beverage & Tobacco Products remains the best performing industry sector, and Computer & Electronic Products, and Chemical Products returned to respectable growth. Transportation Equipment and Fabricated Metal Products continue to contract, but at much softer levels," says Fiore. Of the 18 manufacturing industries, the 13 that reported growth in June — in the following order — are: Textile Mills; Wood Products; Furniture & Related Products; Printing & Related Support Activities; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Plastics & Rubber Products; Chemical Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; Paper Products; and Electrical Equipment, Appliances & Components. The four industries reporting contraction in June are: Transportation Equipment; Primary Metals; Fabricated Metal Products; and Machinery. WHAT RESPONDENTS ARE SAYING
Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes. COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY Commodities Up in Price Commodities Down in Price Commodities in Short Supply Note: The number of consecutive months the commodity is listed is indicated after each item. JUNE 2020 MANUFACTURING INDEX SUMMARIES PMI® A PMI® above 42.8 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June PMI® indicates the overall economy grew in June after a small increase in May, following contraction in April. The manufacturing sector grew after three consecutive months of contraction. "The past relationship between the PMI® and the overall economy indicates that the PMI® for June (52.6 percent) corresponds to a 2.9-percent increase in real gross domestic product (GDP) on an annualized basis," says Fiore. THE LAST 12 MONTHS
New Orders Of the 18 manufacturing industries, the 11 that reported growth in new orders in June — in the following order — are: Textile Mills; Plastics & Rubber Products; Wood Products; Printing & Related Support Activities; Food, Beverage & Tobacco Products; Chemical Products; Furniture & Related Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Machinery; and Computer & Electronic Products. The two industries reporting a decline in new orders in June are: Fabricated Metal Products; and Transportation Equipment.
Production The 13 industries reporting growth in production during the month of June — listed in order — are: Textile Mills; Furniture & Related Products; Wood Products; Printing & Related Support Activities; Petroleum & Coal Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Chemical Products; Computer & Electronic Products; Paper Products; Machinery; Electrical Equipment, Appliances & Components; and Miscellaneous Manufacturing. The three industries reporting a decrease in production in June are: Primary Metals; Transportation Equipment; and Fabricated Metal Products.
Employment Of the 18 manufacturing industries, the five industries to report employment growth in June are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; and Chemical Products. The 11 industries reporting a decrease in employment in June, in the following order, are: Printing & Related Support Activities; Petroleum & Coal Products; Transportation Equipment; Primary Metals; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Paper Products; Furniture & Related Products; Fabricated Metal Products; Machinery; and Miscellaneous Manufacturing.
Supplier Deliveries† Fourteen of 18 industries reported slower supplier deliveries in June, listed in the following order: Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Textile Mills; Computer & Electronic Products; Paper Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Chemical Products; Food, Beverage & Tobacco Products; Plastics & Rubber Products; Fabricated Metal Products; Transportation Equipment; and Machinery. The only industry reporting faster supplier deliveries in June is Furniture & Related Products.
Inventories The nine industries reporting higher inventories in June, in order, are: Apparel, Leather & Allied Products; Furniture & Related Products; Textile Mills; Printing & Related Support Activities; Wood Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Computer & Electronic Products. The six industries reporting a decrease in inventories in June — listed in order — are: Electrical Equipment, Appliances & Components; Fabricated Metal Products; Machinery; Plastics & Rubber Products; Transportation Equipment; and Chemical Products.
Customers' Inventories† Of the 18 industries, the four reporting higher customers' inventories in June are: Furniture & Related Products; Transportation Equipment; Primary Metals; and Electrical Equipment, Appliances & Components. The nine industries reporting customers' inventories as too low during June — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Plastics & Rubber Products; Fabricated Metal Products; Chemical Products; Computer & Electronic Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; and Machinery.
Prices† The eight industries reporting paying increased prices for raw materials in June — listed in order — are: Apparel, Leather & Allied Products; Wood Products; Fabricated Metal Products; Computer & Electronic Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Machinery; and Chemical Products. The five industries reporting a decrease in prices for raw materials in June are: Plastics & Rubber Products; Paper Products; Primary Metals; Transportation Equipment; and Food, Beverage & Tobacco Products.
Backlog of Orders† The six industries reporting growth in order backlogs in June, in the following order, are: Textile Mills; Plastics & Rubber Products; Nonmetallic Mineral Products; Computer & Electronic Products; Machinery; and Chemical Products. In June, seven industries reported lower backlogs, in the following order: Food, Beverage & Tobacco Products; Transportation Equipment; Petroleum & Coal Products; Miscellaneous Manufacturing; Furniture & Related Products; Fabricated Metal Products; and Electrical Equipment, Appliances & Components.
New Export Orders† The three industries reporting growth in new export orders in June are: Textile Mills; Paper Products; and Plastics & Rubber Products. The nine industries reporting a decrease in new export orders in June, in the following order, are: Nonmetallic Mineral Products; Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Primary Metals; Fabricated Metal Products; Computer & Electronic Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Chemical Products. Six industries reported no change in new export orders in June compared to May.
Imports† The five industries reporting growth in imports in June are: Apparel, Leather & Allied Products; Wood Products; Printing & Related Support Activities; Machinery; and Food, Beverage & Tobacco Products. The eight industries reporting a decrease in imports in June — in the following order — are: Nonmetallic Mineral Products; Plastics & Rubber Products; Primary Metals; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; and Computer & Electronic Products.
†The Supplier Deliveries, Customers' Inventories, Prices, Backlog of Orders, New Export Orders and Imports indexes do not meet the accepted criteria for seasonal adjustments. Buying Policy
About This Report The data presented herein is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making. Data and Method of Presentation Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers' Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive). The resulting single index number for those meeting the criteria for seasonal adjustments (PMI®, New Orders, Production, Employment and Inventories) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries (seasonally adjusted), and Inventories. Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A PMI® above 42.8 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 42.8 percent, it is generally declining. The distance from 50 percent or 42.8 percent is indicative of the extent of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis. The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to report on information for the current month for U.S. operations only. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses in order to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month. The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease. Responses to Buying Policy reflect the percent reporting the current month's lead time, the approximate weighted number of days ahead for which commitments are made for Capital Expenditures; Production Materials; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted since there is no significant seasonal pattern. ISM ROB Content Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including but not limited to tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. 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