US Manufacturing Sector Remains Expanding, Input Prices Fall Sharply
US manufacturing activity expanded again for the sixth consecutive month in June. This occurred as the surge in input costs previously triggered by the war and pressure on energy prices eased.
The Institute for Supply Management (ISM) reported that its manufacturing index fell 0.7 points to 53.3. Although slightly weaker, this figure remains near a four-year high. A reading above 50 indicates the manufacturing sector remains in an expansionary phase.
Raw material price pressures have also begun to ease. The index of prices paid for raw materials fell 9.1 points to 73, marking the largest monthly decline since July 2022. This decline occurred after the interim agreement between the United States and Iran caused a sharp drop in oil prices.
New order growth did slow but remained quite solid. Meanwhile, the ISM production index fell to a six-month low. However, strong capital investment, including spending related to artificial intelligence (AI), and defense spending continue to support manufacturing activity.
However, manufacturing expansion has not yet been fully reflected in the labor market. The ISM employment index rose to 49.7, its highest level since January 2025, but remained below 50, indicating continued shrinking employment in the sector.
Meanwhile, the order backlog grew at its slowest pace so far this year, while supplier deliveries continued to show longer lead times. Supply chain disruptions and concerns about further price increases also prompted several factories to increase raw material inventories, causing the ISM inventory index to rise to its highest level in more than a year.
Source: Newsmaker.id
