The U.S. manufacturing sector experienced a contraction for the third consecutive month in June, as indicated by a report from the Institute for Supply Management (ISM). The ISM manufacturing purchasing managers’ index (PMI) stood at 48.5 percent in June, which is below the 50 percent mark that signifies growth, and a slight decrease from the previous month’s reading of 48.7 percent. This marked the 19th contraction in the manufacturing sector over the last 20 months.
Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, stated that U.S. manufacturing activity continued to contract at the end of the second quarter of 2024. The demand was weak, output declined, and inputs remained accommodative, according to Fiore. Economists have noted that demand remains subdued, with companies reluctant to invest in capital and inventory due to current monetary policy and other conditions.
Earlier this year, data showed that the real gross domestic product (GDP) in the U.S. increased at an annual rate of 1.4 percent in the first quarter of 2024. This was an upward revision from the 1.3 percent estimate issued last month. The Bureau of Economic Analysis reported that real GDP increased by 3.4 percent in the fourth quarter of 2023.
Compared to the fourth quarter, the deceleration in real GDP primarily resulted from decreases in consumer spending, exports, and state and local government spending, as well as a downturn in federal government spending. These movements were partly offset by an acceleration in residential fixed investment. Imports were higher.
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