June 2023 Manufacturing ISM Report On Business Shows Continued Downward Trend for Manufacturing Sector

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected. Economic activity in the manufacturing sector contracted in June for the eighth consecutive month following a 28-month period of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business

The U.S. manufacturing sector contracted in June, as the Manufacturing PMI registered 46 percent, 0.9 percentage point lower than the reading of 46.9 percent recorded in May. This is the eighth month of contraction and continuation of a downward trend that began in June 2022.

ISM’s New Orders Index contracted for the 10th consecutive month in June, registering 45.6 percent, an increase of 3 percentage points compared to May’s reading of 42.6 percent.

The Production Index registered 46.7 percent in June, 4.4 percentage points lower than the May reading of 51.1 percent, indicating a return to contraction after one month of expansion preceded by five consecutive months in contraction.

ISM’s Employment Index registered 48.1 percent in June, 3.3 percentage points lower than the May reading of 51.4 percent. The index indicated employment contracted after two months of expansion preceded by two months of contraction.

The delivery performance of suppliers to manufacturing organizations was faster for the ninth straight month in June, as the Supplier Deliveries Index registered 45.7 percent, 2.2 percentage points higher than the 43.5 percent reported in May.

The Inventories Index registered 44 percent in June, 1.8 percentage points lower than the 45.8 percent reported for May. Manufacturing inventories contracted at a faster rate compared to May.

ISM’s Backlog of Orders Index registered 38.7 percent, a 1.2-percentage point increase compared to May’s reading of 37.5 percent, indicating order backlogs contracted for the ninth consecutive month (though at a slower rate in June) after a 27-month period of expansion.

The four manufacturing industries that reported growth in June are: Printing & Related Support Activities; Nonmetallic Mineral Products; Primary Metals; and Transportation Equipment. The 11 industries reporting contraction in June, in the following order, are: Plastics & Rubber Products; Wood Products; Textile Mills; Chemical Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Paper Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; and Machinery.