The latest data from the Institute for Supply Management (ISM) indicates a continued contraction in the US manufacturing sector, with the ISM Manufacturing Purchasing Managers' Index (PMI) declining to 48.5 in June. This figure marks a slight decrease from May's reading of 48.7 and falls short of economists' expectations of 49.1, highlighting ongoing challenges in the industry.
Key components of the PMI survey revealed mixed trends: while the New Orders Index improved marginally to 49.3 from 45.4, indicating some resilience in demand, the Employment Index declined to 49.3 from 51.1, suggesting ongoing labor market challenges. The Prices Paid Index, a gauge of inflationary pressures, also retreated to 52.1 from 57, reflecting easing cost pressures faced by manufacturers.
Commenting on the survey results, Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, noted, "US manufacturing activity continued in contraction at the close of the second quarter. Demand remained weak, output declined, and companies reduced production levels month over month as workforce reductions persisted in June."
The market reaction to the disappointing ISM manufacturing PMI data has seen the US Dollar Index fall under modest bearish pressure, declining by 0.2% to 105.60. This reaction underscores concerns about the economic recovery's pace and the potential implications for future Federal Reserve policy decisions.
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