The ISM manufacturing index (PMI) was released this morning and reported a PMI of 49.7 – the worst showing since July of 2009[1] and 3.8 point reduction from the May number.
The report revealed several statistics that likely point to another dismal jobs report for June due to be released this Friday.
The new orders, price, order backlog, employment and production indices were all also lower indicating the the manufacturing slowdown is unlikely to reverse soon.
The customers of manufacturers were also showing increasing inventories which illustrates weakening demand later in the supply chain and may indicate that consumers will not likely be the source of a recovery in the next few months.
Exports flipped from growth to decline in the June report and employment showed slower growth. While not indicating job losses in the manufacturing sector, the 56.6 value does show that industry is unlikely to be creating the large number of jobs needed to start decreasing the huge numbers of unemployed workers.
The 49.7 PMI number indicates a slowing manufacturing sector while still being demonstrative of a slightly increasing general economy (GDP). If the PMI falls below 46.2% it is generally thought that it correlates to a recessionary general economy (negative GDP growth).
Sources:
1 – https://www.ism.ws/ISMReport/content.cfm?ItemNumber=10752
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