US manufacturing remains in contraction, further thoughts on broader economy

The June ISM manufacturing index fell a hair to 48.5 from 48.7 and that was under the estimate of 49.1. It’s been above 50 once since the Fall of 2022. New orders did rise 3.9 pts m/o/m but is still below 50 at 49.3. Backlogs were deeply under 50 at 41.7, lower by .7 pts and the least since November 2023 as just one of 18 industries saw an increase in backlogs. Supplier deliveries, something now to watch again with shipping prices and travel lengths increasing again, rose .9 pts to about 50 at 49.8 but around the 6 month average. Prices paid fell for a 2^nd month to 52.1 from 57 and back under its 6 month average of 55.2. Inventories remained under 50 at 45.4 and it was down 2.5 pts m/o/m so no signs yet here of any inventory restock. Export orders were in contraction at 48.8, down 1.8 pts and imports fell 2.6 pts to 48.5. Finally, the employment component dipped back under 50 again to 49.3, lower by 1.8 pts.

In terms of breadth, 8 industries of 18 surveyed saw growth vs 7 seen last month but 9 said their businesses were shrinking vs 7 in the month before. The balance of one saw no change.

The bottom line from the ISM was this, “Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions.”