IHS Markit US Manufacturing PMI

June data signalled a further near-stagnation of operating conditions across the U.S. manufacturing sector. The rate of overall growth held close to May's near-decade low. On a positive note, the rate of output growth quickened slightly amid a renewed rise in new orders. However, in line with muted increases in output, firms reined in staff hiring, expanding workforce numbers at the slowest pace for almost three years. Subsequently, output expectations remained subdued.

On the price front, inflationary pressures remained muted despite slight accelerations in rates of output charge and input price inflation.

The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index (PMI) posted 50.6 in June, broadly in line with 50.5 in May, to signal only a marginal improvement in the health of the U.S. manufacturing sector. The latest headline reading picked up from the recently released June 'flash' PMI figure (50.1), but was nonetheless the second-lowest figure since September 2009.

Supporting the headline number was a renewed rise in new business in June. The upturn was linked by panellists to the acquisition of new clients. That said, the rate of increase was only modest overall and among the slowest seen over the last three years. In contrast, the pace of growth in new business from abroad was the quickest in 2019 so far, following a slight fall in May.

Consequently, manufacturers registered a faster rise in production in June. Nevertheless, the rate of expansion was only moderate and the second-slowest since June 2016 (behind May's recent low), as firms continued to report difficult demand conditions.

Uncertainty surrounding future output growth weighed on hiring decisions among goods producers, with the rate of job creation softening to the least marked since August 2016. Expectations of production growth over the coming year remained solemn and among the weakest in the survey history in June. Manufacturing firms often raised concerns surrounding tariffs and the softer trend in new orders.

Meanwhile, cost burdens faced by manufacturers continued to rise at a historically muted rate in June. Higher input prices were attributed to the ongoing effects of tariffs on raw material purchases. However, some firms stated that hikes in costs were less marked compared to earlier in the year.

Subsequently, output charges increased at only a modest rate. Some firms partly passed on costs to clients, whereas others highlighted the importance of discounting efforts in order to attract and retain clients.