June ISM: Activity still soft, but prices cooling
|Summary
Manufacturing activity remained in contraction territory in June, but in a sign of moderating inflation pressure, the prices paid component fell 4.9 points. New orders rose more than any other component but remains in contraction.
Prices cool
The ISM manufacturing index slipped to 48.5 in May as tight credit conditions and elevated borrowing costs continue to constrain activity in the factory sector. The headline reading marks a 0.2 point decrease from last month while the prices paid measures at 52.1 represents a 4.9 point monthly decline, the single biggest drop of any component (chart). Price pressures have not gone away, but they have abated.
A bounce in the orders component to 49.3 after slipping to 45.4 in May suggests that the decline in both orders and shipments of core capital goods in May could be short-lived. The 3.9 point jump here was the biggest gain of any component.
One interesting thing to watch is the emerging difficulties in shipping and supply chains. The ongoing attacks in the Suez Canal and the associated re-routing is both expensive and time-consuming. We have heard from a number of clients on this topic in recent weeks, but it was conspicuously absent from the respondent comments. For now at least, the supply chain disruptions are more of an annoyance than they are a massive disruption. The supplier deliveries measure came in at 49.8, up a bit from May's reading.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.