U.S. manufacturing down for 3rd straight month in June, but furniture sector up

TEMPE, Ariz.—U.S. manufacturing activity contracted in June for the third consecutive month and the 19th time in the last 20 months, according to the latest report from the Institute for Supply Management (ISM).

The furniture manufacturing industry was one notable bright spot in the report, being one of eight sectors that saw growth.

Timothy R. Fiore, ISM chairman, noted that “manufacturing PMI registered 48.5 percent in June, down 0.2 percentage points from the 48.7 percent recorded in May. The overall economy continued in expansion for the 50th month after one month of contraction in April 2020. A Manufacturing PMI above 42.5 percent, over a period of time, generally indicates an expansion of the overall economy.”

“Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions. Production execution was down compared to the previous month, likely causing revenue declines, putting pressure on profitability. Suppliers continue to have capacity, with lead times improving and shortages not as severe,” Fiore added.

The inventories index dropped to 45.4 percent in June, a decrease of 2.5 percentage points from May’s 47.9 percent. Manufacturing inventories contracted at a faster rate than the previous month, with none of the six major industries reporting an increase in June. Uncertainty in demand is leading companies to cut back on inventory investments, relying instead on suppliers for ‘on-demand’ inventory. The furniture industry was one of the 10 areas surveyed reporting decreased inventory in June.

Finally, employment in the manufacturing sector decreased slightly in June after increased headcounts in May. “Many Business Survey Committee respondents’ companies are continuing to reduce head counts through layoffs, attrition and hiring freezes. Panelists’ comments in June indicated a marginal decline in staff reductions compared to May, supported by the approximately 1.3-to-1 ratio of hiring versus head-count reduction comments,” noted Fiore.

See also:

  • U.S. manufacturing falls again in May, continuing long period of decline
  • Manufacturing companies still predict growth in 2024, though less than they did

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