Manufacturing activity reached its highest level nationally in nearly three years as the Institute for Supply Management PMI registered 57.8 percent in June.
A reading above 50 indicates the manufacturing economy is generally expanding. The June reading was up from May’s 54.9 percent and was the highest since a 57.9 percent reading in August 2014.
“The past relationship between the PMI and the overall economy indicates that the average PMI for January through June (56.4 percent) corresponds to a 4.1 percent increase in real gross domestic product (GDP) on an annualized basis,” said Timothy Fiore, Institute for Supply Management chair.
The upward trend for the national index in 2017 matches a trend in the Milwaukee-area PMI produced by the Marquette Center for Supply Chain Management, which has had its best six-month stretch since the beginning of 2015. The two reports use similar approaches, but are not directly comparable.
Respondent comments for the national survey-based index were generally upbeat, with many highlighting increased demand in the United States and internationally, although some did voice concerns about increasing prices.
“Metal pricing continues to drag down our profit margins, but we are very busy quoting new business, so our customers have a good outlook on the rest of the year,” a fabricated metal products respondent said.
A paper products manufacturer noted environmental regulations have a strong effect on the business.
“We continue to watch for any changes as a result of the new administration,” the respondent said.
Nearly all of the components in the monthly ISM report remained above 50 in June, with only inventories dropping below the threshold. Customer inventories also flipped from too low in May, at 49.5 percent, to too high at 50.5 percent in June.
The pace of price increases did slow with the measure registering 55 percent in June, down from 60.5 in May.
New orders were up, moving from 59.5 percent to 63.5 percent. Production increased from 57.1 percent to 62.4 percent and employment was up from 53.5 percent to 57.2 percent.
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