Manufacturing grows in June, says report

Manufacturing grows in June, says report
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The manufacturing sector grew in June, a comeback from a severe contraction in May as the coronavirus pandemic hit the economy hard.

The Institute for Supply Management's June manufacturing index stood at 52.6 percent, up from 43.1 percent the previous month. Readings under 50 percent indicate the sector is shrinking.

"The manufacturing sector is reversing the heavy contraction of April, with the PMI® increasing month-over-month at a rate not seen since August 1980, with several other indexes also posting gains not seen in modern times," said Timothy R. Fiore, who chairs the ISM Manufacturing Business Survey Committee.

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The index also found that the overall economy was growing for the second month in a row, following a steep April decline.

But while many indexes were up, the Employment Index clocked in at 42.1 percent. While that figure was an increase of 10 points from May, it remained in contractionary territory.

"This suggests that while manufacturing production has bounced back strongly in the near-term, producers remain wary of rehiring too many workers should the economy recovery stall due to virus concerns," said Ben Ayers, senior economist at Nationwide.

Ayers said the rebound would continue as long as state and local economies continued to gradually reopen.

"There remains a risk, however, that the recent surge in virus infections will limit the growth for the sector and the overall economy depending upon how consumers and governments react," he added.