ISM manufacturing gauge for June beats forecasts
Updated : 15:36
Activity in America's manufacturing sector picked up last month, with gauges for new orders, production and employment all accelerating, the results of the most widely-followed survey for the sector revealed.
The Institute for Supply Management's factory sector purchasing managers' index rose from a reading of 54.9 for May to 57.8 in June.
Economists had expected a smaller rise to 55.0.
"Comments from the panel generally reflect expanding business conditions; with new orders, production, employment, backlog and exports all growing in June compared to May and with supplier deliveries and inventories struggling to keep up with the production pace," said Timoth R. Fiore, the survey committee's chairman.
A gauge of new orders improved, rising from 59.5 to 63.5 with another linked to firms' levels of production gaining from 57.1 to 62.4.
Hiring also picked-up, with the corresponding subindex increasing from 53.5 to 57.2.
Yet prices fell back, with the prices paid subindex slipping from 60.5 to 55.0.
Subindices for new orders and order backlogs also strengthened.
Survey participants from the Plastics & Rubber products, Transportation Equipment and Electrical equipment sectors all reported improved demand.
In parallel, Chemical products and Machinery manufacturers both reported increased demand from overseas.
According to Fiore, the past relationship between the average level of the ISM manufacturing PMI year-to-date, at 56.4, and gross domestic product was consistent a rate of economic expansion of 4.1%.
Michael Gapen at Barclays Research noted the broad-based improvement in the subindices, which drove the headline gauge back to its February and March highs.
Back then, Barclays gave the surge in sentiment short shrift, believing it to be more about excessive optimism front-running policy measures.
Now however, Gapen said he took a more constructive view of the improvement, saying the rise seen was driven more by actual changes on the ground as activity rebounded during the second quarter.