On Thursday, July 1, the Institute for Supply Management (ISM) released data showing that the U.S. manufacturing purchasing managers’ index fell to 60.6 in June from 61.2 in the previous month, which was lower than the previous market expectations of 60.9. According to ISM statistics, the manufacturing PMI has been in the expansionary range for the 13th consecutive month.
Among the data, the new orders subindex and the order backlog index fell after hitting a stage high, the price index remained at a high level, and the employment index fell below the 50-year mark after being in expansion for six consecutive months.
Regarding specific sub-indices.
The new orders index recorded 66%, down 1 percentage point from 67% in May.
The production index recorded 60.8%, up 2.3 percentage points from 58.5% in May.
The employment index recorded 49.9%, down 1 percentage point from 50.9% in May
The supplier delivery index was 75.1%, down 3.7 percentage points from 78.8% in May
The backlog of orders index was 64.5%, down 6.1 percentage points from 70.6% in May.
In addition, the data also showed that the price input index exceeded the 90 mark, recording 92.1, up 4.1 points from the previous survey, the highest level since 1979.
ISM said in a press release this month that the six main branches of manufacturing showed “moderate to strong” growth in May, in the following order: computer and electronic products, chemical products In order: computer and electronic products, chemicals, metal products, transportation equipment, food, beverage and tobacco products, petroleum and coal products.
Timothy R. Fiore, chairman of the association’s manufacturing committee, said in the release of the report that the manufacturing sector performed well for the 13th consecutive month, with strong growth in demand, consumption and inputs compared to May, which is basically the same wording as he did last month. However, he also noted that
Some respondents said their companies and supply chains are still struggling to cope with strong demand, as hiring and retaining direct labor remains difficult, while there are also reports of persistently high inventory backlog levels, too-low user inventories and record raw material lead times. Labor issues across the value chain continue to be a major constraint to accelerating growth.
Similar to the situation in May, Fiore mentioned labor issues in its June report, and the first signs of labor imbalances have emerged in several sectors.
As mentioned in a previous Wall Street Journal article, according to the U.S. Bureau of Labor Statistics, there were 9.3 million vacancies in U.S. businesses as well as government units at the end of April, compared to 4.63 million in the same period in 2020, a figure that broke the record of 7.6 million vacancies set in November 2018. The growth in vacancies is concentrated in a handful of sectors: hotels, bars, restaurants, casinos, museums, and other entertainment venues, that is, in the leisure and services sector.
At the same time, however, the U.S. labor force participation rate has fallen from 61.8 percent to 61.6 percent in May, while year-to-date, each posted vacancy employs about 0.73 workers per month, a figure that stood at 0.81 workers before the epidemic.
The reason for this structural mismatch is unclear, perhaps because manufacturing and other positions requiring higher professional skills have higher talent requirements, while government units are facing a cumbersome hiring process that leads to slow arrival of employees.
After the release of the data, the three major U.S. stock indexes were mixed, including the Dow has been maintained after the opening, but whether to the data release or the cut-off time up by more than 100 points. At press time, the Dow was up 0.25%, the S&P was up 0.25%, and the Nasdaq was down 0.34%. 10-year U.S. bond yields rose 3.1 basis points during the day to 1.475%.
The precious metals trend after the release of the data was significantly weaker, and the downtrend was more pronounced by press time, with silver down more than gold.