The overall economy grew for the forty-ninth straight time, while the manufacturing sector expanded after contracting in May, the Institute for Supply Management reported Monday.
According to the ISM's monthly report on business, the ISM index climbed to 50.9 in June from 49.0 in May.
Economists polled by Thomson Reuters predicted the index would rise to 50.5.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
"The PMI registered 50.9 percent, an increase of 1.9 percentage points from May's reading of 49 percent, indicating expansion in the manufacturing sector for the fifth time in the first six months of 2013," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. "The New Orders Index increased in June by 3.1 percentage points to 51.9 percent, and the Production Index increased by 4.8 percentage points to 53.4 percent. The Employment Index registered 48.7 percent, a decrease of 1.4 percentage points compared to May's reading of 50.1 percent. Manufacturing employment contracted for the first time since September 2009, when the index registered 47.8 percent. The Prices Index registered 52.5 percent, increasing 3 percentage points from May, indicating that overall raw materials prices increased from last month. Comments from the panel generally indicate slow growth and improving business conditions."
The prices paid index increased to 52.5 from 49.5. The employment index slipped to 48.7 from 50.1 the prior month.
The production index increased to 53.4 from 48.6, the new orders index rose to 51.9 from 48.8; the supplier deliveries index grew to 50.0 from 48.7; the export orders index gained to 54.5 from 51.0; and the imports index rose to 56.0 from 54.5.
The inventories index rose to 50.5 from 49.0; the customers' inventories index dipped to 45.0 from 46.0; and backlog of orders dropped to 46.5 from 48.0.
Respondents' comments included:
"Business remains good to improving." (Miscellaneous Manufacturing)
"Industry volumes picking up with improved housing starts." (Electrical Equipment, Appliances & Components)
"Indications are that customers have acceptable inventory levels, and as a result, are backing down on new orders and reassessing market conditions." (Wood Products)
"Last couple of weeks a little slower." (Furniture & Related Products)
"Seeing signs of life through summer retail [sales] promotions - still an overall soft market." (Food, Beverage & Tobacco Products)
"Business is steady. Qualified CNC machinists are hard to find." (Fabricated Metal Products)
"Weather conditions are causing uncertainty in agricultural markets." (Machinery)
"Continued slow improvements." (Transportation Equipment)
"June sales appear to have rebounded from what was a lackluster May." (Paper Products)
"Slow growth continues to choke the recovery. We are not out of the woods yet by any stretch of the imagination." (Chemical Products)