U.S. manufacturing growth slows
July 6, 2006,
Tempe, Ariz. -- The nation's manufacturing sector continued to grow during June, but at a slowing pace for a second straight month. Rising prices for oil and raw materials remain a major concern for purchasing managers at America's smoke-stack companies, according to a monthly gauge of sentiment in the manufacturing community.
Providing the most support to the overall reading was a rebound in the component for new orders, which climbed 4.2% to a level of 57.9, up from 53.7 in May. In more good news, order backlogs rose by 1.0%; and after rising sharply in recent months, the index measuring the price paid for raw materials stabilized somewhat, dipping by 0.5% to 76.5. June may have marked a turning point, with the index doing an about-face after a string of big increases. But the prices index is still 13.1% higher than it was just three months prior, in March, when it measured 66.5.
Elsewhere, results were still choppy. While new orders staged a comeback, production was down by 2.1%, employment fell by 4.2%, and supplier deliveries were off by 2.6%. Manufacturers' inventories were off by 1.1%, but customers' inventories were up by 1.5%, which could lead to a slowdown in new orders going forward. Export orders were off by 0.3%, and imports were unchanged.
"The sector is benefiting from the weaker dollar and business investment," said Norbert Ore, chairman of the ISM Manufacturing Business Survey Committee. "While energy and raw material prices are still a concern, our members indicate that they are coping with the challenges, and generally see their businesses in a continuing growth mode."
But some sectors struck a dissenting note:
-- "Sales were off the mark in May, which changed the direction of the year as the first four months were extremely positive," said a fabricated metals supplier.
-- "Business activity in the construction industry has slowed down considerably," said a glass, stone and aggregate supplier.
-- "Trucking is getting tougher, and we are spending a lot of time trying to find carriers to pick up loads in a timely manner," said a transportation and equipment supplier.
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