US: June manufacturing PMI at a two-year low

US manufacturing activity slowed significantly in July, with the related S&P Global PMI falling to a two-year low as inflationary pressures and disruptions to global supply chains continue to weigh on the US economy.

In particular, the manufacturing PMI fell to its lowest level since July 2020, slipping to 52.7 points from 57.0 points in May, according to final data released today by S&P Global. However, the final reading was slightly better than the initial estimate at 52.4 points.

“The PMI survey fell in June to a level that suggests manufacturing is acting as a ‘drag’ on GDP with this expected to intensify as we move into the summer,” commented Chris Williamson, chief economist at S&P Global Market Intelligence. “Forward-looking indicators such as business expectations, new order flows, backlog and materials purchases have all deteriorated significantly, indicating an increased risk of contraction in industrial production,” he added.

The research of the Institute for Supply Management (ISM) for the sector also showed a slowdown in manufacturing activity. In particular, the manufacturing PMI fell to 53 points from 56.1 points in May. This is the lowest reading of the index since June 2020.

The new orders index fell to 49.2 from 55.1 in May, the order backlog index stood at 53.2 from 58.7 the previous month, while the industry employment index was unchanged for the second consecutive month month below the 50 level that separates expansion from contraction in activity, to 47.3 from 49.6 in May.