EmailThe ISM Manufacturing Index expanded from 53.5 in May to 55.3 in June. The Briefing.com consensus expected the index to fall to 51.1.
The acceleration in manufacturing was a surprise considering the performance of most regional manufacturing surveys.
Three out of the six regional manufacturing surveys -- New York Fed's Empire State Manufacturing Survey, Philadelphia Fed's Business Outlook, and Dallas Fed's Texas Manufacturing Outlook -- all contracted in June and the Richmond Fed's Fifth District Survey of Manufacturing was barely above its expansion/contraction threshold.
The only signs of positive growth came from the Chicago PMI (up from 56.6 in May to 61.1 in June) and the Kansas City Fed's Summary of Tenth District Manufacturing Conditions (up from 1 in May to 14 in June), which both rebounded off of the prior month's lows.
As we mentioned in the Chicago PMI review, the unexpected increase suggests auto manufacturing is ramping back up quicker than most economists anticipated following the supply-induced slowdown from the Japanese earthquake and tsunami.
Order backlogs (which entered a contraction phase, falling from 50.5 in May to 49.0 in June) and exports (from 55.0 in May to 53.5 in June) were the only subindices that weakened this month.
Both the production index (up from 54.0 to 54.5) and new orders index (from 51.0 to 51.6) increased by roughly the same amount.
The weak growth, combined with the contraction in backlogs, suggests a drop in orders could result in production contracting next month.
