As the US celebrates 235 years of independence today, there is some cause, if not to celebrate, at least to be a little less anxious about the state of the economy.
Economic activity in the manufacturing sector expanded in June for the 23rd consecutive month, and the overall economy grew for the 25th consecutive month, according to supply executives polled in the latest Manufacturing ISM Report On Business.
"The PMI registered 55.3 percent, an increase of 1.8 percentage points from May, indicating expansion in the manufacturing sector for the 23rd consecutive month,” said Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee.
“New orders and production were both modestly up from last month, and employment showed continued strength with an increase of 1.7 percentage points to 59.9 percent. The rate of increase in prices slowed for the second consecutive month, dropping 8.5 percentage points in June to 68 percent.
“This follows a similar reduction of 9 percentage points in the Prices Index in May, and is the lowest figure since August 2010 when the index registered 61.5 percent. While the rate of price increases has slowed and the list of commodities up in price has shortened, commodity and input prices continue to be a concern across several industries."
Of the 18 manufacturing industries identified by the survey, 12 report growth in June, in the following order:
Miscellaneous manufacturing;
Printing & related support activities;
Computer & electronic products;
Paper products;
Textile mills;
Petroleum & coal products;
Nonmetallic mineral products;
Transportation equipment;
Chemical products;
Fabricated metal products;
Machinery; and
Electrical equipment, appliances & components.
The five industries reporting contraction in June are:
Plastics & rubber products;
Apparel, leather & allied products;
Primary metals;
Wood products; and
Food, beverage & tobacco products.
A PMI reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
"The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (58.8 percent) corresponds to a 5.7 percent increase in real gross domestic product (GDP),” added Holcomb.
It’s hardly enough to break out the fireworks, but Americans have a better reason to do that today.
