Manufacturing Expands Slightly in June

Washington, DC, July 1, 2008--Manufacturing showed slight expansion in June, although the inflation picture deteriorated, according to the The Institute for Supply Management.

ISM reported Tuesday that its factory index rose to 50.2 in June from 49.6 in May. Readings above 50 indicate expansion in the manufacturing sector.

Norbert Ore, who oversees the ISM survey said manufacturing seems to be holding up "amazingly well." But he cautioned that it was not wise to read too much into June's gain and said rising energy prices were putting pressure on manufacturers.
 
"There is a huge amount of inflation" in raw materials and intermediate goods, Ore said.

Most of the gains in the index in June came from lagging indicators like inventories and supplier deliveries.

New orders and production were little changed. Employment fell to a five-year low in June.

Nine of 18 industries were growing in June, including paper, petroleum, metals and chemicals. Ore said that there was a bifurcation in the manufacturing sector, with sectors with export orders holding up the index, while housing-related manufacturing activities are clearly in recession.