July 3, 2017 – The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that the manufacturing sector is growing while a reading below 50 indicates a contraction.
The June ISM manufacturing report came in at a level of 57.8, well above expectations of 55.1, and above May’s level of 54.9. The June level marks the highest reading of the index since November 2014. New orders and production contributed the most to the rising ISM Manufacturing index rising 63.5 and 62.4, respectively, while prices took a decline to 55 percent in June.
Fifteen of the eighteen manufacturing industries reported growth in June with the highest growth in furniture & related products, nonmetallic mineral products, and paper products. With the ISM reading well above 50, we see the manufacturing sector expanding and healthy GDP growth. Along with the manufacturing index, there are other readings that provide an insight to how different components of the manufacturing sector will perform, including new orders for durable goods and industrial production.