US manufacturing extends slump; inflation pressures easing
Business
US manufacturing extends slump; inflation pressures easing
WASHINGTON (Reuters) - US manufacturing contracted for a third straight month in June as demand remained subdued, while a drop in a measure of prices paid by factories for inputs to a six-month low suggested that inflation could continue to subside.
The weakness at the end of the second quarter reported by the Institute for Supply Management on Monday was across the board, with ISM Manufacturing Business Survey Committee Chair Timothy Fiore describing manufacturers as demonstrating "an unwillingness to invest in capital and inventory due to current monetary policy and other conditions."
Manufacturing is being pressured by higher interest rates and softening demand for goods, though business investment has largely held up.
"We expect the manufacturing sector to remain weak over the next couple of quarters," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "The retreat in corporate bond yields since late last year ... seems to have provided some support to investment spending, but not enough to get manufacturing growing again. A much more significant loosening in financial conditions is required to change that."
The ISM's manufacturing PMI slipped to 48.5 last month from 48.7 in May. A PMI reading above 50 indicates growth in the manufacturing sector, which accounts for 10.3% of the economy.
The PMI remains above the 42.5 level, which the ISM says over a period of time indicates an expansion of the overall economy.
Economists polled by Reuters had forecast the PMI climbing to 49.1. It has indicated contraction in 19 of the last 20 months.
