United States: ISM manufacturing index rebounds in June
The Institute for Supply Management (ISM) manufacturing index increased from 43.6 in May to 52.6 in June, beating market expectations of 49.5 and marking the highest reading in 14 months. Consequently, the index was above the 50-threshold that separates expansion from contraction in the manufacturing sector.
June’s result was driven by strong expansions in production and new orders, while employment improved notably—but continued to point to a deterioration. Moreover, new export orders and backlogs of work also declined at a weaker pace in June relative to May.
Looking ahead, the manufacturing sector will likely remain hampered relative to its pre-crisis output levels as anemic economic activity weighs on demand. Moreover, a recent spike in Covid-19, which resulted in reintroducing lockdown measures in certain states, poses serious downside risk for the manufacturing sector.