Economic reports for June 2014 have reported a 61st consecutive month of growth. In particular the manufacturing sector reported expansion for its 13th straight month according to supply executives in the most recent manufacturing business report from the Institute for Supply Management (ISM). The June purchasing managers index (PMI) registered 55.3. A PMI over 50 indicates growth in the industry. Of the 18 manufacturing industries there are 15 reporting growth and only three reporting contraction in June. Respondents mostly seemed positive with the strong seasonal results, improving economic outlook, and better consumer conditions than previous years. One respondent from the food, beverage, and tobacco products industry said, “Business volume is increasing at a good pace and consumers appear to be spending more.”
Despite Growth in Manufacturing, Order Backlogs Contract
Despite the growth in the industry and continued increase in new orders, there was one index that dropped 4.5 points in June; backlog of orders was reported as contracting in June for only the second time this year, the first being in January. With an index of 48, the drop in order backlogs was the largest move of the month among manufacturing indices. However, order backlogs was the only negative in this month’s report other than respondents reporting beliefs that customer inventories remain too low for the 31st consecutive month.
These results continue the strong trend since the lower-than-expected results in the first quarter, a trend which should keep manufacturers optimistic moving forward.