In June, the US manufacturing ISM surprised friend and foe by falling back into contraction territory for the first time since July 2009. The manufacturing ISM dropped from 53.5 to 49.7, while only a limited decline was expected, to 52.0.
The details are more mixed. New orders (47.8 from 60.1) fell sharply and also new export orders (47.5 from 53.5) weakened significantly in June. Production (51.0 from 55.6), backlog of orders (44.5 from 47.0), inventories (44.0 from 46.0) and employment (56.6 from 56.9) deteriorated too, while supplier deliveries (48.9 from 48.7) and customer inventories (48.5 from 43.5) picked up from low levels. Imports remained stable at 53.5, for a fourth consecutive month while prices paid dropped sharply (37 from 47.5). While the regional business confidence indicators were very weak, most had hoped on a better outcome for the broader manufacturing ISM. Over the previous months, the manufacturing ISM held up surprisingly well, but now the index suggests that slowing global growth and the debt crisis are starting to weigh on the US economy too.