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Manufacturing Activity Falls

Economic indicators showed a more muted picture for U.S. manufacturing over the past month. NAM Chief Economist Chad Moutray gave us the lowdown.

U.S. manufacturing falls: “The S&P Global Flash U.S. Manufacturing PMI declined from 57.0 in May to 52.4 in June, the lowest reading since July 2020,” said Moutray.

  • “Both new orders (down from 56.1 to 48.4) and output (down from 55.2 to 49.6) contracted in June for the first time in roughly two years, with global challenges, supply chain bottlenecks, workforce shortages and inflationary pressures weighing heavily on activity.”

Digging deeper: “Delivery times (up from 31.1 to 33.0) remained too long but lessened a bit in June,” said Moutray.

  • “Exports (down from 52.2 to 49.7) fell for the first time since January, and growth in employment (down from 53.1 to 52.3) slowed.”
  • “Raw material costs (down from 84.2 to 77.9) remained highly elevated but decelerated in June, growing at the weakest pace since April 2021.”

Looking ahead: “With that said, the index for future output (down from 69.7 to 64.9) signaled optimism about production growth moving forward despite weakening for the third straight month,” said Moutray. 
Across the pond: “Meanwhile, the S&P Global Flash Eurozone Manufacturing PMI decreased from 54.6 in May to 52.0 in June, the weakest reading since August 2020,” said Moutray. “The Russian invasion of Ukraine continued to impact activity negatively, with output contracting for the first time since June 2020 and new orders and exports deteriorating further.”

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