US manufacturing activity has slowed down for the first time in three years, fueling concerns that global economic growth has stalled. The Institute of Supply Management said its PMI, an index of manufacturing growth, fell to 49.7 percent in June from 53.5 percent in May. (A score above 50 indicates growth, and a score below 50 signals contraction.) Worse, the ISM's measure of future business also declined, indicting the slowdown will last for several months.
“The New Orders Index dropped 12.3 percentage points in June, registering 47.8 percent and indicating contraction in new orders for the first time since April 2009, when the New Orders Index registered 46.8 percent,” Bradley J. Holcomb, CPSM, CPSD, chairman of the ISM's Manufacturing Business Survey Committee, said in a press release. Comments from companies participating in the survey range from optimism to concern that demand may be softening due to economic uncertainties in Europe and China, he said.
Electronics was one of seven industries that grew in June, according to the ISM report. However, feedback from industry participants indicated demand was trending downward in all regions of the world. Production levels in the electronics and computer sectors also rose in June, but new orders followed the general trend, declining from May to June.
The report is being met with pessimism from the business press and the stock market. The Dow Jones industrial average fell immediately after the ISM released its report this morning. As of midafternoon Monday, the Dow was still in the red.