US manufacturing sees modest rise in June, PMI reaches 3-month high

US manufacturing saw a modest monthly improvement in business conditions, as the seasonally adjusted manufacturing purchasing managers’ index (PMI) ticked up to a three-month high of 51.6 in June, from 51.3 in May, according to S&P Global.

Some signs of demand picking up helped firms to secure a rise in new orders for the second month running, with the rate of growth quickening. The pace of expansion remained only slight, however, amid high prices and challenging economic conditions.

Meanwhile, new export orders were broadly unchanged in June, ending a four-month sequence of growth. While Canada and Germany were among the locations to provide increases in new business, some firms indicated lower new orders from mainland China.

US manufacturers expanded production in response to higher new orders, but the relatively muted demand environment meant that the rate of growth eased from that seen in May.

While the rate of increase in output slowed in June, companies were also less optimistic regarding the 12-month outlook for production. Sentiment dropped to the lowest since November 2022. That said, firms remained confident that output will expand, in some cases reflecting expectations of a pick-up in new orders from current muted levels.

Expectations of an increase in new orders, plus higher current output requirements, encouraged firms to take on extra staff. Employment rose for the sixth month running, and at a solid pace that was the fastest in 21 months.

Higher staffing levels helped firms to keep on top of workloads and reduce backlogs again in June. That said, the pace of depletion was only fractional. In some cases, firms mentioned that supply-chain delays had prevented them from working through more outstanding business.

Suppliers' delivery times lengthened for the first time in five months amid issues with shipping, port congestion and staff shortages at vendors. That said, the lengthening of lead times was only marginal.

Higher supplier charges were signalled in June. Alongside rising labour costs, this resulted in a further marked increase in input prices. That said, the rate of inflation eased to a three-month low.

The pace of output price inflation also slowed, the third month running in which this has been the case. Where charges were raised, this reflected the passing on of higher input costs to clients. On the other hand, some firms lowered selling prices as part of efforts to remain competitive.

US manufacturers lowered their purchasing activity following a rise in the previous month, as part of general efforts to limit stock holdings. As a result, pre-production inventories also fell, albeit only fractionally. Some firms indicated that their inventories had been reduced to an extent whereby it had become time to start replenishing them.

Meanwhile, stocks of finished goods decreased for the first time in three months, and to the largest extent since last November.

Fibre2Fashion News Desk (DP)