July 8, 2024COTW: ISM PMIs

  • The ISM Manufacturing PMI registered 48.5 in June, down from 48.7 in May, indicating contraction in the manufacturing sector for the third consecutive month (a reading below 50 signals contraction). Similarly, the ISM Services PMI unexpectedly dropped to 48.8 in June, down from 53.8 in May, and signaling contraction in the services sector for the second time in the last three months.
  • Across both manufacturing and services, the slowdown was broad-based, with most subindexes such as new orders, production, employment, and inventory levels contracting. In manufacturing, the new orders index remained in contraction territory at 49.3, though up from 45.4 in May. Production contracted to 48.5 and employment declined to 49.3. In services, the business activity index fell sharply to 49.6 from 61.2, the first contraction since May 2020. New orders declined to 47.3 and employment to 46.1.
  • The slowdown is attributed to weakening demand, high inflation, rising interest rates, and supply chain challenges. Manufacturers are seeing softer customer orders and reduced production.


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