June US Manufacturing Moves Back to Positive

The June ISM index showed US manufacturing sector activity improved further, in line with the regional and Markit data.

Survey respondents in the ISM report noted a rebound in demand has kept factories busy.

The headline PMI index improved to 52.6 from 43.1 in May, above expectations for an increase to 49.1 and indicating expansion.

The new orders index rose to 56.4 from 31.8 in May, while the production reading jumped to 57.3 from 33.2. Both indicate positive growth has resumed.

The employment index improved to 42.1 from 32.1 in May, still indicating contraction, but manufacturing payrolls rose last month despite the low ISM reading.

The Markit manufacturing index released earlier Wednesday was revised up slightly to 49.8, up sharply from the 39.8 reading in May.

Construction spending for May, released at the same time as the ISM report, fell by 2.1%, well below the 0.8% gain expected. Year-to-date construction spending was still up 5.7% from the same period a year earlier.

Private residential construction fell by 4.0%. Calculations using the published data show that private new home construction fell by 6.3%. The housing starts and permits data for May had pointed to a partial rebound after a sharp April decline.

Home remodeling was up only 0.1%. When private home remodeling is excluded from total construction, overall construction would have been down 2.5%.

Private nonresidential construction spending fell by 2.4% on widespread declines, while public construction spending rose by 1.2%.

Released earlier on Wednesday, ADP reported that their count of private payrolls rose by 2.37 million in June after a sharply upward revised 3.07 million jump in May, with the key movements seen in the hard-hit leisure and hospitality and health care sectors. While impressive, these two months of gains are only the start of the recovery from April’s 19.4 million job loss.

Challenger reported their June layoffs total slowed further, but was still more than three times the total from a year ago. The 170,219 layoffs in June followed May’s 397,016 total and 671,129 in April, summing to a record 1,238,364 total layoffs in the second quarter.

June layoffs were led again by the entertainment and leisure sector, which added 92,954 job cuts in the current month and 671,840 cuts so far this year. Hiring plans, not surprisingly, were led by the health care sector.

Kevin Kastner



Julie Ros

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