US ISM Manufacturing PMI inched higher to 49.0 in June from 48.5, marking its fourth straight month in contraction territory but beating expectations of 48.8. While the slight improvement hints at stabilization, the broader picture remains soft. Notably, employment deteriorated further, falling to from 46.8 to 45.0, the fifth consecutive month of contraction. The prices paid index rose marginally from 69.4 to 69.7, indicating that cost pressures remain elevated, though the reading was still below market expectations of 70.2.
According to ISM, 46% of the manufacturing sector’s GDP contracted in June, a notable improvement from 57% in May. However, the share of GDP considered to be in “strong contraction” (PMI 45 or below) jumped to 25%, up sharply from 5% the prior month.
Despite the overall PMI suggesting 1.9% annualized GDP growth based on historical relationships, the underlying data show significant fragility in manufacturing employment and uneven recovery across subsectors.
