Manufacturing economic growth accelerated in June, helped by increased production, the Institute for Supply Management (Tempe, AZ) said today.
At the same time, purchasing and supply managers expressed concern about a possible trade war as other nations respond to US tariffs, the group said.
“This has really become top of mind in the manufacturing sector for several months,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call.
ISM’s manufacturing index, known as the PMI, was 60.2% in June, up from 58.7% in May, according to a monthly report.
Seventeen of 18 industries reported economic growth last month, including textiles, wood products, fabricated metal products, transportation equipment, machinery, primary metals and miscellaneous manufacturing. No industry reported an economic decline in June.
The ISM report is based on a survey of 350 purchasing and supply executives. A reading above 50% indicates economic expansion. Below 50% indicates contraction. The PMI has averaged 59% the past 12 months. The PMI has been above 50% for 22 consecutive months.
There is uncertainty how about the index will perform in the year’s second half. The United States imposed tariffs of 25% on steel and 10% on aluminum in March. Some countries were initially exempted but the tariffs have become more widespread. Canada responded July 1 with new tariffs on $13 billion of US-made goods. The European Union and Mexico are also imposing tariffs on US products. The Trump administration is considering additional tariffs on cars.
“Tariffs have been a hot topic since March,” Fiore said, referring to responses to the PMI survey. “It’s a serious issue. The overall message we received there’s an extreme amount of activity to deal with original aluminum and steel tariffs. A lot of companies are adjusting where they should manufacture products.”
Last week, Harley-Davidson said last week it plans to move some production out of the United States to avoid European Union tariffs. President Donald Trump responded by criticizing the motorcycle maker.
For June, ISM’s Production Index was a big contributor to economic growth. That index rose to 62.3% from 61.5% in May. Sixteen of 18 industries reported increases in output. Only apparel reported a decrease in June compared with May.
The group’s New Orders Index eased slightly in June to 63.5% from 63.7% the month before. Sixteen of 18 industries reported a gain in new orders. Only apparel reported a decline in such orders.
ISM’s Employment Index eased to 56% in June, from 56.3% in May. None of the 18 industries reported a cut in jobs.