US manufacturing activity expands, posts biggest month-over-month increase since 1980


US manufacturing activity expanded in June for the second month in a row after contracting sharply in April, the Institute for Supply Management announced today. Its manufacturing PMI measure of manufacturing activity rose to a level of 52.6%, up from 43.1% in May. That represents the biggest month-over-month increase since August 1980.

“As predicted, the growth cycle has returned after three straight months of Covid-19 disruptions,” said Timothy Fiore, chair of the institute’s Manufacturing Business Survey Committee. “Demand, consumption and inputs are reaching parity and are positioned for a demand-driven expansion cycle as we enter the second half of the year.”

PMI readings above 42.8% over time generally indicate the overall expansion of the economy. June’s reading of 52.6% shows the overall economy grew in June and follows a small month-over-month increase in May with its reading of 43.1%. The PMI had contracted in April when it sank to a reading of 41.5%.

The employment portion of the index in June rose to a reading of 42.1%, which still shows contraction in manufacturing employment. However, that’s an improvement from the readings of 32.1% in May and 27.5% in April.

“This is the 11th consecutive month of employment contraction, but at a slower rate compared to May,” Fiore said. “Three of the six big industry sectors experienced expansion, as stay-at-home orders were lifted and more people returned to work.”

ISM’s report is based on data from purchasing and supply executives nationwide.