According the the Institue for Supply Management’s report for June, economic activity in the manufacturing sector expanded following four months of contraction, while the overall economy grew for the 80th consecutive month. Norbert J. Ore, C.P.M., chair of the Institute for Supply Management said that “While the PMI indicates minimal change is taking place month over month that is hardly the situation. When viewed from the manufacturer’s perspective, they are experiencing higher prices for their inputs while demand for their products is slowing.”
The nine industries reporting growth in June — listed in order — are: Printing & Related Support Activities; Paper Products; Computer & Electronic Products; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Chemical Products; Primary Metals; Furniture & Related Products; and Fabricated Metal Products. The industries reporting contraction in June are: Wood Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Machinery; Nonmetallic Mineral Products; Apparel, Leather & Allied Products; and Plastics & Rubber Products. Importantly, the prices paid component rose 4.5 points to 91.5, the highest level seen since the late 1970’s. Meanwhile, the employment index fell 1.8 to 43.7. The headline expansion number flatters the underlying report, as respondents to the survey reported that the “commodity bubble is killing profitability,” and that “orders have slowed, and prices for metals are going up.”
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