Thursday, July 01, 2010

ISM Mfg index shows slower expansion in June, Pending Home sales collapse

by Bill McBride on 7/01/2010 10:00:00 AM

A two-in-one post ...

PMI at 56.2% in June down from 59.7% in May.

From the Institute for Supply Management: June 2010 Manufacturing ISM Report On Business®

Economic activity in the manufacturing sector expanded in June for the 11th consecutive month, and the overall economy grew for the 14th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Norbert J. Ore, CPSM, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The manufacturing sector continued to grow during June; however, the rate of growth as indicated by the PMI slowed when compared to May. The lower reading for the PMI came from a slowing in the New Orders and Production Indexes. We are now 11 months into the manufacturing recovery, and given the robust nature of recent growth, it is not surprising that we would see a slower rate of growth at this time. The sector appears to be solidly entrenched in the recovery. Comments from the respondents remain generally positive, but expectations have been that the second half of the year will not be as strong in terms of the rate of growth, and June appears to validate that forecast."
...
ISM's New Orders Index registered 58.5 percent in June, which is a decrease of 7.2 percentage points when compared to the 65.7 percent reported in May.
...
ISM's Employment Index registered 57.8 percent in June, which is 2 percentage points lower than the 59.8 percent reported in May.
emphasis added
And from the NAR: Pending Home Sales Drop as Expected
The Pending Home Sales Index, a forward-looking indicator, dropped 30.0 percent to 77.6 based on contracts signed in May from a reading of 110.9 in April ... NAR chief economist Lawrence Yun said, “The sharp decline in contract signings in May is a natural result with similar low levels of sales activity anticipated in June.”
Both the ISM index and pending home sales were below consensus.