Tempe AZ, July 1--Manufacturers saw activity grow at a slightly less robust rate in June, as the strong prices they've been facing moderated a bit, said a report released today.
The Institute for Supply Management said its manufacturing index declined to 61.1 last month from 62.8 in May. Despite the dip, that still marked the 13th consecutive month of expansion. Any reading above 50 indicates expansion, while one below 50 indicates that manufacturing activity is contracting. The gauge has been above 50 since June of last year. Economists had forecast a reading of 61.5.
"The manufacturing sector grew at a slightly slower, but still aggressive, rate in June," said Norbert Ore, who directs the survey for the ISM. "June represents a strong finish to the first half of the year, and the current picture is very encouraging for the third quarter, as new orders and production are still growing significantly."
Some economists had adjusted their forecasts for today's report lower after a grim reading on Chicago-area factories yesterday. That report showed higher prices, softening demand and a modest downturn in hiring.
Analysts were paying particular attention to the part of the report that tracks the prices manufacturers pay for materials, hoping to gauge inflation. That subindex declined from 86.0 to 81.0, meaning that manufacturers continue to pay higher prices, but that the rate of increase slowed somewhat.
Elsewhere in the report, the new-orders index fell to 60.0 from 62.8 in May, while the production index also declined, sliding from 63.2 to 64.8. The employment index showed that factory hiring cooled last month; it slid from 61.9 in May to 59.7 in June. But factories also bulked up their stocks, as the inventories index registered a 51.1 reading versus 49.3 in May.
