US manufacturing grew in June but pace begins to slow

01 July 2010 21:38  [Source: ICIS news]

WASHINGTON (ICIS news)--US manufacturing industries continued to expand in June but the rate of growth slowed compared with April and May, and the sector is likely to moderate further through the rest of this year, the Institute for Supply Management (ISM) said on Thursday.

The institute said that its closely watched purchasing managers index (PMI) fell to 56.2% in June from the 59.7% rating recorded in May as new orders for manufactured goods slackened and production levels slowed compared with earlier months.

The PMI was at 60.4% in April, the highest level seen since June 2004.

A PMI reading of 50% or higher indicates that the manufacturing sector is generally expanding, while an index below 50% signals that production is contracting.

June’s PMI of 56.2% means that the manufacturing sector is continuing to grow - but not as robustly as in earlier months.

The June PMI was the lowest reading since December 2009.

“We are now 11 months into the manufacturing recovery,” said Norbert Ore, chairman of the institute’s survey committee, “and given the robust nature of recent growth it is not surprising that we would see a slower rate of growth at this time.”

“The sector appears to be solidly entrenched in the recovery,” Ore said, adding: “but expectations have been that the second half of the year will not be as strong in terms of the rate of growth, and June appears to validate that forecast.”

Each month the institute surveys purchasing managers at manufacturing firms in 18 different production categories to gauge the state of the nation’s overall production industries.

In the June survey results, chemicals manufacturing and plastics producers were among the 13 industrial segments reporting growth.

Also reporting growth last month were transportation equipment, computer and electronic products, appliances, food and beverage producers and furniture manufacturing - all important downstream consuming sectors for chemicals and resins and their derivatives.

Apparel production, wood products and machinery manufacturing were the three industries reporting contraction in June, the institute said.

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