CHICAGO Economic activity in the manufacturing sector expanded in June following a month-earlier contraction, with the Purchasing Managers Index (PMI) rising to 50.9 percent as new orders and prices improved.
But the employment index contracted for the first time since September 2009, falling 1.4 points to 48.7 percent, the Institute for Supply Managements June business report shows.
While business remains steady, some survey respondents said they expect a little seasonal slowing in the next couple of months.
Twelve of 18 industries saw growth in June, including metal producers and fabricators.
The price index climbed to 52.5 percent in June from 49.5 percent in May. Metal producers reported paying more for raw materials, while fabricators paid less. Aluminum prices rose, while those for hot- and cold-rolled carbon steel and stainless steels declined.
The new orders index rose to 51.9 percent, with both metal producers and fabricators reporting growth last month.
Production also turned positive during June, rising to 53.4 percent, as both producers and fabricators reported gains. Producers also added workers last month as fabricators shed jobs.
Inventories rose in June, both overall and for the metals sector, although producers said their customers inventories were too high.
The order backlog index moved down again in June, landing at 46.5 percent. Metal producers were among the industries that saw backlogs shrink. Producers and fabricators each saw higher export orders last month, however, and the new export orders index rose 3.5 percentage points. Metal producers and fabricators also saw imports increase in June.
One analyst was less than enthusiastic.
"The manufacturing sector is recording such modest growth that surveys cannot tell the difference from stagnation," Michael Montgomery, U.S. economist at Lexington, Mass.-based consultancy IHS Global Insight Inc., said.
What the survey shows, he said, "is that manufacturing is essentially stalled (and) the operating environment is almost identical to what it has been for most of the last year, with no signs of improvement or deterioration."