U.S. IHS Markit Factory Index Hovers Near Contraction Level

(Bloomberg) -- The U.S. Manufacturing Purchasing Managers' Index improved by half-a-point to 50.6 in June from the preliminary reading of 50.1 released last week, according to IHS Markit. But, the June index remains near the lowest level in a decade.

The index has fallen by almost five points over the last year.

“A major development in recent months has been the deteriorating performance of larger companies,” said Chris Williamson, economist at IHS Markit. “After inventories rose sharply earlier in the year, large companies have moved to destocking in May and June amid a sharp slowing in new order inflows.”

Both domestic and new orders from abroad improved in June after seeing declines in the prior month. The report cited anecdotal evidence suggesting new orders increased from the acquisition of new clients. New business from abroad rose at the fastest pace since 2018 signaling that businesses are finding ways to navigate President Trump's trade policies.

Job creation in the manufacturing sector reached the six-year mark of uninterrupted growth, but the pace was the slowest since August 2016, as “uncertainty surrounding future new order volumes weighed on hiring decisions,” Williamson said.

To contact the reporter on this story: Alexandre Tanzi in Washington at atanzi@bloomberg.net

To contact the editors responsible for this story: Alexandre Tanzi at atanzi@bloomberg.net, Chris Middleton

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