US manufacturing holds up better than expected in June
American manufacturing held up better-than-expected last month albeit amid a widespread impact from trade tariffs, the results of a closely-followed survey showed.
The Institute for Supply Management's factory sector Purchasing Managers' Index slipped from a reading of 52.1 for May to 51.7 in June, but nevertheless came in ahead of the 51.2 which economists had anticipated.
A sub-index tracking companies' production levels rose by 2.8 percentage points to 54.1 while another linked to staffing levels rose by 0.8 points to 54.5.
But subindices tied to orders levels retreated, with one for new orders retreating from 52.7 to 50.0 and that for new export orders down from 51.0 to 50.5.
One survey participant from the computer and electronic products sector told the ISM: "China tariffs and pending Mexico tariffs are wreaking havoc with supply chains and costs.
"The situation is crazy, driving a huge amount of work [and] costs, as well as potential supply disruptions."
Nevertheless, respondents from the transportation equipment, food and plastics sectors described either current or expected demand conditions as "strong".
"The blood-curdling drops in the Philly Fed, Empire State and Chicago PMIs proved unreliable guides to the ISM, probably because the first two surveys were conducted during the period when the US was threatening to impose tariffs on Mexico, while the Chicago index is under pressure from the troubles at Boeing [...]," said Pantheon Macroeconomics's chief economist Ian Shepherdson.
"Still, the survey is weak overall, just not as weak as we feared. We hope for a modest rebound over the next months, though, assuming progress is made on the China trade negotiations and the fitful recovery in China’s business cycle gathers a bit of momentum. In the meantime, manufacturing is soft, but it’s not soft enough to make a big difference to the overall pace of economic growth."