"The normal business cycle seems to have returned"
- Mikee Johnson, chief executive of Cox Industries
U.S. manufacturing sector growth slowed slightly in June, though number of new orders rose to the highest level in six months. The greenback weakened for a fifth straight day versus an index of major peers following the data release. The Institute for Supply Management said the corresponding index fell to 55.3 from 55.4 in May, with any number above the 50-mark indicating expansion. The forward-looking new orders subindex climbed to 58.9 up from 56.9 in May, the highest level since December, whereas the production subindex declined to 60 from 61 a month earlier, but remained consistent with a solid growth in the Fed's measure of industrial production. While production and new orders rose, the strength has not yet translated into higher hiring levels, with the employment reading being unchanged at 52.8 in June suggesting only a small gain in factory payrolls. Instead of hiring, manufacturers improves productivity in order to meet demand.
The PMI averaged 55.2 in the three months to March up from the first quarter reading of 52.7. The ISM report follows other data, which showed the U.S. economy expanded faster in the second quarter after the growth slowed at a 2.9% annual rate due to harsh winter weather in the beginning of the year. The positive data generates optimism among manufacturers.
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