Manufacturing bounces back as country reopens

Index climbs over 50 after two straight months of contraction.

U.S. manufacturing rebounded in June as major parts of the country opened back up, ending three months of contraction in the sector caused by the coronavirus pandemic.

The Institute for Supply Management, an association of purchasing managers, said Wednesday that its manufacturing index rose to 52.6 last month after registering 43.1 in May and 41.5 in April. Any reading below 50 signals that U.S. manufacturers are contracting.

New orders, production, hiring and new export orders all jumped in June, after they all declined in May but at a slower pace than in April.

“As predicted, the growth cycle has returned after three straight months of COVID-19 disruptions,” said Timothy Fiore, chair of ISM manufacturing index committee. “Demand, consumption and inputs are reaching parity and are positioned for a demand-driven expansion cycle as we enter the second half of the year.”

However, just as the June numbers reflect the broader economic improvements as major parts of the country opened up for business, a spike in coronavirus cases in high-population states like California, Florida and Texas is a cause for concern.

Gregory Daco, chief economist at

Construction spending dipped in May

U.S. construction spending fell 2.1% in May with both home building and nonresidential activity declining.

The Commerce Department said on Wednesday the May decline followed an even larger 3.5% fall in April. Construction spending was also down in March, falling 0.3%.

The construction industry has been rocked by the shutdowns triggered by the coronavirus pandemic and with cases rising again in many parts of the country there are concerns that construction could see further declines in coming months.

Oxford Economics, said that while the June report was positive, weak demand, lingering supply chain disruptions and high uncertainty, among other factors, could make for a sluggish recovery.

“Further, with the number of coronavirus cases now rising in many parts of the country, including several states where manufacturing activity is concentrated, the nascent recovery risks being curtailed by the re-imposition of lockdowns,” Daco said.

Of the 18 manufacturing industries 13 reported growth in June.

AP Ford Motor Co. employees work a ventilator at the Rawsonville plant in Ypsilanti Township, Mich. The plant was converted into a ventilator factory as hospitals battling the coronavirus reported shortages.