US manufacturing activity remained in expansion territory in June but lost some momentum, with the ISM Manufacturing PMI easing from 54.0 to 53.3, below expectations of 54.2. The report pointed to slower growth in both demand and production, though the headline reading continued to signal a healthy pace of activity consistent with an economy that is still expanding.
The details showed new orders edging down from 56.8 to 56.0 and the production index falling from 54.3 to 52.2, suggesting manufacturing growth moderated after a strong second quarter. The employment index improved from 48.6 to 49.7 but remained below the 50 threshold for a 33rd consecutive month, highlighting that manufacturers continue to rely on productivity gains rather than broad-based hiring. ISM noted that a Manufacturing PMI of 53.3 historically corresponds to annualized real GDP growth of around 2%.
The most notable development came from prices. The Prices Index fell sharply from 82.1 to 73.0, well below expectations of 79.0 and marking the largest monthly decline since July 2022. The data suggest that the easing in oil prices during June is beginning to feed through to manufacturers’ costs, reinforcing evidence that the second-quarter energy shock has not generated broader inflation pressures.
| Indicator | Previous | Latest | Consensus |
|---|---|---|---|
| ISM Manufacturing PMI | 54.0 | 53.3 | 54.2 |
| New Orders | 56.8 | 56.0 | — |
| Production | 54.3 | 52.2 | — |
| Employment | 48.6 | 49.7 | — |
| Prices | 82.1 | 73.0 | 79.0 |
