US manufacturers continued to recover in June from the sharp downturn caused by the coronavirus crisis, though the sector remained weak overall, according to an industry survey released on Wednesday.
The Institute for Supply Management’s (ISM) manufacturing index jumped to 52.6% from 43% in May, beating the consensus but in line with other economic indicators showing the easing of lockdowns implemented to stop the coronavirus was boosting the economy.
“June signifies manufacturing entering an expected expansion cycle after the disruption caused by the coronavirus (Covid-19) pandemic,” the index’s chair Timothy R. Fiore said in a statement.
“The manufacturing sector is reversing the heavy contraction of April, with the (overall index) increasing month-over-month at a rate not seen since August 1980, with several other indexes also posting gains not seen in modern times.”
Any reading above 50% indicates expansion, and the total was supported by new orders which surged to 56.4%, up 24.6 percentage points from May.
Employment increased 10 points to 42%, while production was at 57.3% after gaining 24.1 points from the prior month.
Prices also rose 10.5 points, while the supplier deliveries index decreased, which ISM called “a normal level of tension between supply and demand.”
However, Ian Shepherdson of Pantheon Macroeconomics warned that the data indicates the sector remains weak overall, and is vulnerable to another downturn, particularly as virus cases increase across the country.
“We’re happy that manufacturing activity appears to have risen in June, but a full recovery is a long way off, and we’re worried about the risk of a temporary relapse in the face of the second Covid wave,” Shepherdson said.
That concern was reflected in some of the responses to the survey.
“While we are seeing signs of an uptick in business activity, it is a slow recovery at this point,” a chemical products executive said.
AFP
