US factory activity contracted slightly for a third straight month last month, while a measure of prices fell by the most in more than a year.
The Institute for Supply Management’s (ISM) manufacturing gauge was little changed at 48.5 compared with 48.7 a month earlier, data out yesterday showed. The gauge remains modestly below the reading of 50 that separates contraction and expansion.
The group’s measure of prices paid for materials fell 4.9 points, the most since May last year. At 52.1, the index shows the slowest growth in costs this year.
Photo: Joel Angel Juarez, Reuters
While the overall manufacturing gauge still shows shrinking activity, one positive sign for producers was a pickup in the ISM’s new orders gauge. The measure rebounded nearly 4 points to 49.3, indicating bookings are getting closer to stabilizing.
Meanwhile, ISM’s production index slipped into contraction territory — to 48.5 from 50.2 — and factory employment shrank.
The figures indicate US manufacturing continues to struggle for momentum due to high borrowing costs, restrained business investment in equipment and uneven consumer spending as the Federal Reserve keeps interest rates higher for longer.
“Demand remains subdued as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions,” ISM’s Manufacturing Business Survey Committee chair Timothy Fiore said in a statement. “Production execution was down compared to the previous month, likely causing revenue declines, putting pressure on profitability.”
Nine industries reported contracting activity last month, led by textile mills, machinery and fabricated metals. Eight indicated growth.
Recent reports have sent mixed signals about manufacturing. Figures last week showed orders placed with US factories for business equipment unexpectedly declined in May, while separate data showed a broad pickup in factory output.
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