Good news moved across the tape this morning when the Institute for Supply Management indicated that the nation's manufacturing base had firmed up a bit in June, closing out a listless first half on a modestly better note.
Specifically, the ISM reported that manufacturing activity had registered a slight expansionary reading of 50.9. That was a bit above the consensus estimate of 50.0. It should be noted that a survey result above 50 signals that this sector is growing, while a score below that mark is consistent with some contraction in this industrial category.
In May, manufacturing had taken a one-month hiatus, coming in with a disappointing reading of 49.0. In addition to this sector, the report also noted that the nation's economy has now expanded for 49 months in a row, further affirming that the recovery from the deepest recession since the 1930s was now starting its fifth year.
The latest expansion in manufacturing, meanwhile, was the fifth such increase in the first six months this year, and was principally put in place by increases in new orders last month, along with gains in production, supplier deliveries, prices, and exports. However, the report also affirmed that employment had declined in June, along with backlogs, which settled in lower following a weak showing in May.
As to comments about this gain in aggregate activity, purchasing managers in the electrical equipment area noted that industry volumes were picking up, especially on the housing front. The good news also extended to the areas of food, beverages, and tobacco products. Business is steady, meantime, in fabricated metal products, according to respondents, and showing some improvement on the transportation side.
All told, this was a mildly reassuring report in the key industrial sector. Hopefully the good news now will extend to the companion non-manufacturing arena, which is due to report its findings on Wednesday morning. At the time of this article's writing, the author did not have positions in any of the companies mentioned.