US man­u­fac­tur­ing ac­tiv­ity ex­pands in June: ISM

Kuwait Times - - BUSINESS -

WASH­ING­TON: US man­u­fac­tur­ing ac­tiv­ity ex­panded in June with big jumps in all the key com­po­nents, in­clud­ing pro­duc­tion, new or­ders and em­ploy­ment, the In­sti­tute for Sup­ply Man­age­ment said yes­ter­day. "This was a re­ally strong per­for­mance," said Ti­mothy R Fiore, chair of ISM's Man­u­fac­tur­ing Busi­ness Sur­vey Com­mit­tee. The ISM pur­chas­ing man­agers in­dex surged nearly three points to 57.8 per­cent, the high­est since Au­gust 2014, on a four-point jump in new or­ders to 63.5 per­cent.

That was far stronger than an­a­lysts had ex­pected, with the con­sen­sus fore­cast just 55.0. Any­thing above 50 in­di­cates growth. The pro­duc­tion in­dex jumped 5.3 points to 62.4 per­cent, which in turn drove a 3.7 point in­crease in em­ploy­ment to 57.2 per­cent - the ninth con­sec­u­tive in­crease. "New or­ders were up strongly, sup­ported by an in­crease in pro­duc­tion. The em­ploy­ment ex­panded to meet pro­duc­tion needs," Fiore told re­porters in a con­fer­ence call. How­ever, continued un­cer­tainty over the Trump ad­min­is­tra­tion's trade pol­icy - amid mul­ti­ple threats of ac­tion against key trad­ing part­ners - re­mains a con­cern that could im­pact in­vest­ment. "This un­cer­tainty doesn't re­ally help the busi­ness en­vi­ron­ment," Fiore said.

Of the 18 in­dus­tries sur­veyed, 15 re­ported growth, but as ex­pected in such a strong month, in­ven­to­ries de­clined, fall­ing 2.5 points to 49 per­cent, while the back­log of or­ders rose two points to 57 per­cent. The price in­dex fell 5.5 points to 55 per­cent, in­di­cat­ing prices are still in­creas­ing but at a slower rate. Fiore noted that the close of the sec­ond quar­ter and the need to meet pro­duc­tion goals, as well as pos­si­ble ramp­ing up of pro­duc­tion ahead of nor­mal sum­mer shut­downs and va­ca­tions could have con­trib­uted to the big jump in June.

But com­ments from those in­dus­tries sur­veyed in­di­cate or­ders are re­main­ing strong and de­spite past re­ports of strug­gles to find qual­i­fied work­ers, hir­ing showed an uptick last month at the end of the school year, he said. Asked if the pro­duc­tion gains were sus­tain­able, Fiore said it is pos­si­ble. "We'll see," he said. "If new or­ders con­tinue to come in as they have been and com­pa­nies can keep up... and sup­ply chain doesn't be­come a con­straint, there is no rea­son this can­not con­tinue."

Barclays an­a­lyst Michael Gapen said he was more in­clined to view this in­crease as a real move fol­low­ing a sim­i­lar jump in Fe­bru­ary and March which he and his col­leagues "dis­counted... as re­flect­ing, among other items, ex­ces­sive op­ti­mism about pol­icy ex­pec­ta­tions." "We take a more con­struc­tive view of the re­cent im­prove­ment... and see the rise as driven more by ac­tual changes on the ground, as ac­tiv­ity has re­bounded in the sec­ond quar­ter rel­a­tive to ear­lier in the year."

Ian Shep­herd­son, chief econ­o­mist at Pan­theon Macroe­co­nomics, noted that the state of the man­u­fac­tur­ing sec­tor "dis­pro­por­tion­ately in­flu­ences per­cep­tions of the pace of growth," even though it should not have such a large im­pact on the over­all eco­nomic out­look and by ex­ten­sion the course of ac­tion by the Fed­eral Re­serve. So "this re­port will come as some­thing of a jolt to in­vestors com­fort­able with the idea that the econ­omy has slowed to the point where the Fed need take no fur­ther ac­tion." The cen­tral bank has been widely ex­pected to raise the bench­mark in­ter­est rate a third time later this year, but some econ­o­mists have been push­ing back against that cer­tainty given the very tepid in­fla­tion rate and ab­sence of wage pres­sures. — AFP

RENTON, Wash­ing­ton: In this Feb 13, 2017 photo, work con­tin­ues on the in­te­rior of the first of the large Boe­ing 737 MAX 9 mod­els as it sits at the front of the assem­bly line and al­most ready to roll out at the com­pany’s air­plane pro­duc­tion fa­cil­ity. — AP

Newspapers in English

Newspapers from Kuwait

© PressReader. All rights reserved.