PMI® at 53.2%; June Manufacturing ISM® Report On Business®; New Orders, Production and Employment Growing; Inventories Contracting; Supplier Deliveries Slower

TEMPE, Ariz., July 1, 2016 /PRNewswire/ -- Economic activity in the manufacturing sector expanded in June for the fourth consecutive month, while the overall economy grew for the 85th consecutive month, say the nation's supply executives in the latest Manufacturing ISM^® Report On Business^®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee. "The June PMI^® registered 53.2 percent, an increase of 1.9 percentage points from the May reading of 51.3 percent. The New Orders Index registered 57 percent, an increase of 1.3 percentage points from the May reading of 55.7 percent. The Production Index registered 54.7 percent, 2.1 percentage points higher than the May reading of 52.6 percent. The Employment Index registered 50.4 percent, an increase of 1.2 percentage points from the May reading of 49.2 percent. Inventories of raw materials registered 48.5 percent, an increase of 3.5 percentage points from the May reading of 45 percent. The Prices Index registered 60.5 percent, a decrease of 3 percentage points from the May reading of 63.5 percent, indicating higher raw materials prices for the fourth consecutive month. Manufacturing registered growth in June for the fourth consecutive month, as 12 of our 18 industries reported an increase in new orders in June (down from 14 in May), and 12 of our 18 industries reported an increase in production in June (same as in May)."

Of the 18 manufacturing industries, 13 are reporting growth in June in the following order: Printing & Related Support Activities; Textile Mills; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Apparel, Leather & Allied Products; Paper Products; Miscellaneous Manufacturing; Computer & Electronic Products; Chemical Products; Primary Metals; Machinery; and Nonmetallic Mineral Products. The three industries reporting contraction in June are: Electrical Equipment, Appliances & Components; Transportation Equipment; and Plastics & Rubber Products.

WHAT RESPONDENTS ARE SAYING ...

• "We are gaining new customers through better sales management." (Food, Beverage & Tobacco Products)
• "Slower shipments because of weather related flooding." (Chemical Products)
• "Conditions have remained steady from [the] past month and are in line with our forecast." (Computer & Electronic Products)
• "Very good start of summer for business levels/orders." (Fabricated Metal Products)
• "Business is steady with some signs of increase." (Machinery)
• "Business is still strong, but slowing slightly." (Transportation Equipment)
• "Business conditions are good, production and demand are stable." (Miscellaneous Manufacturing)
• "Orders are slowing from China. American customers still steady." (Primary Metals)
• "Demand continues to be robust." (Plastics & Rubber Products)
• "Business is still slower than expected." (Nonmetallic Mineral Products)

Manufacturing ISM^® Report On Business^® data is seasonally adjusted for the New Orders, Production, Employment and Supplier Deliveries Indexes. 
*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

Commodities Up in Price 
Aluminum* (5); Corn (2); Corrugate; Diesel (3); Fuel Oil; Gasoline (2); Natural Gas; Oil (3); Stainless Steel (3); Steel (6); Steel – Carbon; Steel — Cold Rolled (3); and Steel — Hot Rolled* (5).

Commodities Down in Price 
Aluminum*; and Steel — Hot Rolled*.

Commodities in Short Supply 
None (2).

Note: The number of consecutive months the commodity is listed is indicated after each item. 
*Reported as both up and down in price.

JUNE 2016 MANUFACTURING INDEX SUMMARIES

PMI^®
Manufacturing expanded in June as the PMI^® registered 53.2 percent, an increase of 1.9 percentage points from the May reading of 51.3 percent, indicating growth in manufacturing for the fourth consecutive month, and is the highest reading since February 2015 when the PMI registered 53.3 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI^® above 43.2 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the June PMI^® indicates growth for the 85th consecutive month in the overall economy, while indicating growth in the manufacturing sector for the fourth consecutive month. Holcomb stated, "The past relationship between the PMI^® and the overall economy indicates that the average PMI^® for January through June (50.8 percent) corresponds to a 2.4 percent increase in real gross domestic product (GDP) on an annualized basis. In addition, if the PMI^® for June (53.2 percent) is annualized, it corresponds to a 3.2 percent increase in real GDP annually."

THE LAST 12 MONTHS

New Orders 
ISM^®'s New Orders Index registered 57 percent in June, which is an increase of 1.3 percentage points when compared to the 55.7 percent reported for May, indicating growth in new orders for the sixth consecutive month. A New Orders Index above 52.2 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

The 12 industries reporting growth in new orders in June — listed in order — are: Textile Mills; Printing & Related Support Activities; Petroleum & Coal Products; Apparel, Leather & Allied Products; Fabricated Metal Products; Nonmetallic Mineral Products; Chemical Products; Food, Beverage & Tobacco Products; Furniture & Related Products; Computer & Electronic Products; Miscellaneous Manufacturing; and Paper Products. The five industries reporting a decrease in new orders during June are: Wood Products; Electrical Equipment, Appliances & Components; Primary Metals; Plastics & Rubber Products; and Transportation Equipment.

Production
ISM^®'s Production Index registered 54.7 percent in June, which is an increase of 2.1 percentage points when compared to the 52.6 percent reported for May, indicating growth in production in June for the sixth consecutive month. An index above 51.3 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

The 12 industries reporting growth in production during the month of June — listed in order — are: Printing & Related Support Activities; Wood Products; Miscellaneous Manufacturing; Petroleum & Coal Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Primary Metals; Paper Products; Chemical Products; Nonmetallic Mineral Products; and Electrical Equipment, Appliances & Components. The three industries reporting a decrease in production during June are: Transportation Equipment; Plastics & Rubber Products; and Machinery.

Employment
ISM^®'s Employment Index registered 50.4 percent in June, an increase of 1.2 percentage points when compared to the May reading of 49.2 percent, indicating growth in employment in June following six consecutive months of employment contraction. An Employment Index above 50.6 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, in June, the seven industries reporting employment growth — listed in order — are: Textile Mills; Printing & Related Support Activities; Furniture & Related Products; Primary Metals; Miscellaneous Manufacturing; Computer & Electronic Products; and Chemical Products. The six industries reporting a decrease in employment in June — listed in order — are: Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Machinery; Fabricated Metal Products; Plastics & Rubber Products; and Food, Beverage & Tobacco Products.

Supplier Deliveries
The delivery performance of suppliers to manufacturing organizations was slower in June as the Supplier Deliveries Index registered 55.4 percent, which is 1.3 percentage points higher than the 54.1 percent reported for May. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The eight industries reporting slower supplier deliveries in June — listed in order — are: Fabricated Metal Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Chemical Products; Machinery; Plastics & Rubber Products; Transportation Equipment; and Computer & Electronic Products. The three industries reporting faster supplier deliveries during June are: Furniture & Related Products; Primary Metals; and Miscellaneous Manufacturing. Seven industries reported no change in supplier deliveries in June compared to May.

Inventories*
The Inventories Index registered 48.5 percent in June, which is an increase of 3.5 percentage points when compared to the 45 percent reported for May, indicating raw materials inventories are contracting in June for the 12th consecutive month, but at a slower rate than in May. An Inventories Index greater than 42.8 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The eight industries reporting higher inventories in June — listed in order —  are: Wood Products; Printing & Related Support Activities; Plastics & Rubber Products; Machinery; Paper Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Primary Metals. The seven industries reporting lower inventories in June — listed in order — are: Furniture & Related Products; Fabricated Metal Products; Computer & Electronic Products; Chemical Products; Miscellaneous Manufacturing; Nonmetallic Mineral Products; and Electrical Equipment, Appliances & Components.

Customers' Inventories* 
ISM^®'s Customers' Inventories Index registered 51 percent in June, which is an increase of 1 percentage point when compared to the 50 percent reported for May, indicating that customers' inventory levels are considered too high in June.

The five manufacturing industries reporting customers' inventories as being too high during the month of June are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Fabricated Metal Products; Furniture & Related Products; and Transportation Equipment. The six industries reporting customers' inventories as too low during June — listed in order — are: Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Plastics & Rubber Products; Machinery; Chemical Products; and Food, Beverage & Tobacco Products. Six industries reported no change in customer inventories in June compared to May.

Prices*
The ISM^® Prices Index registered 60.5 percent in June, which is a decrease of 3 percentage points when compared to the 63.5 percent reported for May, indicating an increase in raw materials prices for the fourth consecutive month. In June, 27 percent of respondents reported paying higher prices, 6 percent reported paying lower prices, and 67 percent of supply executives reported paying the same prices as in May. A Prices Index above 52.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

Of the 18 manufacturing industries, the 12 industries that reported paying increased prices for its raw materials in June — listed in order — are: Fabricated Metal Products; Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Chemical Products; Nonmetallic Mineral Products; Primary Metals; Machinery; Transportation Equipment; Plastics & Rubber Products; Miscellaneous Manufacturing; and Computer & Electronic Products. The three industries reporting paying lower prices during the month of June are: Wood Products; Petroleum & Coal Products; and Paper Products.

Backlog of Orders*
ISM^®'s Backlog of Orders Index registered 52.5 percent in June, an increase of 5.5 percentage points when compared to the May reading of 47 percent, indicating growth in order backlogs. Of the 89 percent of respondents who reported their backlog of orders, 24 percent reported greater backlogs, 19 percent reported smaller backlogs, and 57 percent reported no change from May.

The seven industries reporting growth in order backlogs in June — listed in order — are: Textile Mills; Fabricated Metal Products; Printing & Related Support Activities; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; and Chemical Products. The six industries reporting a decrease in order backlogs during June — listed in order — are: Wood Products; Apparel, Leather & Allied Products; Primary Metals; Transportation Equipment; Machinery; and Paper Products.

New Export Orders*
ISM^®'s New Export Orders Index registered 53.5 percent in June, an increase of 1 percentage point over the May reading of 52.5 percent. This month's reading indicates growth in new export orders for the fourth consecutive month.

The 10 industries reporting growth in new export orders in June — listed in order — are: Petroleum & Coal Products; Food, Beverage & Tobacco Products; Chemical Products; Fabricated Metal Products; Plastics & Rubber Products; Transportation Equipment; Miscellaneous Manufacturing; Machinery; Computer & Electronic Products; and Paper Products. The three industries reporting a decrease in new export orders during June are: Primary Metals; Nonmetallic Mineral Products; and Electrical Equipment, Appliances & Components.

Imports*
ISM^®'s Imports Index registered 52 percent in June, an increase of 2 percentage points over the May reading of 50 percent, indicating growth in imports in June.

The seven industries reporting growth in imports during the month of June — listed in order — are: Nonmetallic Mineral Products; Machinery; Miscellaneous Manufacturing; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; and Fabricated Metal Products. The two industries reporting a decrease in imports during June are: Chemical Products; and Transportation Equipment. Eight industries reported no change in imports in June compared to May.