Economy: ISM Manufacturing Index for June 2020

Earlier today, the Institute for Supply Management® (ISM®) released their Manufacturing Purchasing Manager's Index (PMI®) for June 2020:

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Predicted: 50.0%

Actual: 52.6% (+9.5 points month-on-month change)

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Previous month: 43.1%

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Every month, the ISM surveys purchasing and supply executives at hundreds of companies across the country who are involved in manufacturing in some form. The resulting index is watched closely by academics, economists and investors because manufacturing accounts for about 12% of U.S. Gross Domestic Product (GDP).

The PMI is a reliable barometer of U.S. manufacturing: A PMI above 50% implies that U.S. manufacturing expanded during the month specified, while a reading below 50% implies that the made-in-the-USA sector contracted.

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From Today's Report:

"...Economic activity in the manufacturing sector grew in June, with the overall economy notching a second month of growth after one month of contraction, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®..."

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The following is a sampling of quotes from a diverse pool of U.S. manufacturers:

“While we are seeing signs of an uptick in business activity, it is a slow recovery at this point.”
(Chemical Products)

“Gradually ramping production back in our plants. Most of our supply base continued to operate during COVID-19, so we are not seeing a significant supply risk. Will be monitoring supply chain financial health closely.”
(Transportation Equipment)

“Thankfully, we are in quite a few industries, so impact wasn't as harsh on us and more stable. However, during the last two weeks, our bookings have grown, and supply seems to be more readily available.”
(Fabricated Metal Products)

“Difficulty keeping up with a significant increase in demand related to COVID-19. Industry is up 62.5 percent versus [a] year ago. Supply challenges throughout the supply chain. Supply could be hindered if another wave of COVID-19 hits in the fall.”
(Food, Beverage + Tobacco Products)

“Market demand for refined products has increased as statewide quarantines have been lifted, but it is still below normal volumes.”
(Petroleum + Coal Products)

“Orders have picked up and are trending toward normal production requirements [volume similar to 2019 production].”
(Plastics + Rubber Products)

“We are seeing an increase in orders as the economy starts to get rolling again. Slow and steady, sales are increasing. So far, so good.”
(Primary Metals)

“Looks like May was the bottom in terms of orders. June is stronger, and our order books are rebuilding.”
(Machinery)

“Demand is down significantly due to COVID-19 but is starting to stabilize. We are hopeful for recovery in the second half of the year.”
(Miscellaneous Manufacturing)

“The building industry continues to defy expectations, as we continue to rebound stronger from the previous month. Being an essential business across most states and a surge in DIY projects has fueled the industry forward. While the industry will follow the greater economy, we do believe it will be more resilient than most due to potential migration from larger cities and an under-supplied housing market.”
(Wood Products)

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