US manufacturing activity picks up in June - ISM

Growth in the US economy's manufacturing sector unexpectedly picked up in June, according to data from the US Institute for Supply Management.

The ISM's headline manufacturing index rose to 60.2 from 58.7 in May, beating expectations for a drop to 58.1 and close to the 14-year high of 60.8 reached in February. A reading above 50 indicates expansion while a reading below signals contraction.

The new orders index ticked down to 63.5 from 63.7 last month, while the production index rose to 62.3 from May's 61.5 and the supplier deliveries index rose to 68.2 from 62.

The employment index printed at 56 versus 56.3 in May and the inventories index nudged up to 50.8 in June from 50.2 the month before, while the prices index came in at 76.8 from 79.5 in May.

Michael Pearce, senior US economist at Capital Economics, said the increase in the ISM manufacturing index in June is a clear sign that, for now at least, the strength of the domestic economy is more than offsetting any increased uncertainty on trade policy.

"However, with the dollar appreciating by 6% since April, global growth slowing and retaliatory tariffs just beginning to bite, the sector looks unlikely to fare so well for long," he said.

Ian Shepherdson, chief economist at Pantheon Macroeconomics, said the headline index was driven mostly by the jump in the supplier deliveries index, which hit its highest level since May 2004.

"Overall, the survey shows that the manufacturing sector is in good shape, but the delivery times number has to be watched closely; further increases would be disconcerting," he said.