By Michele McKenney, Manufacturing Client Service Team Staff Accountant

Following a month of employment contraction, the manufacturing sector’s economic activity expanded in June along with the overall economy, according to the June Manufacturing Report on Business from the Institute for Supply Management (ISM). June marked the 49th consecutive month of growth for the overall economy. Twelve of the eighteen manufacturing industries reported growth, two were unchanged, and four contracted.

ISM’s purchasing managers’ index (PMI) is comprised of five equally weighted components: new orders, production, employment, suppliers’ delivery, and inventories. In June, the PMI registered at 50.9 percent, an increase of 1.9 percent from May. According to the report, a reading above 50 percent indicates that the economy is generally expanding.

Of the five components of PMI, employment was the only one to see contraction in June. The employment index decreased from 50.1 percent in May to 48.7 percent in June. This indicates contraction in manufacturing employment for the first time since a 47.8 percent reading in September 2009. One survey respondent from the fabricated metal products industry commented, “Business is steady. Qualified CNC machinists are hard to find,” which speaks to the shortage of skilled laborers these employers are facing today (see Forbes article for more).

The PMI reading of 50.9 percent is a sign of growth, albeit very slow. A survey respondent from the chemical products industry commented that the “slow growth continues to choke the recovery.” Supply of skilled laborers remains an uncertainty for the manufacturing industry going forward.