Manufacturing activity in the U.S. unexpectedly contracted at a slightly faster rate in the month of June, according to a report released by the Institute for Supply Management on Monday.
The ISM said its manufacturing PMI edged down to 48.5 in June from 48.7 in May, with a reading below 50 indicating contraction. Economists had expected the index to inch up to 49.1.
The unexpected dip by the headline index came amid a downturn in production, as the production index fell to 48.5 in June from 50.2 in May.
The employment index also slid to 49.3 in June from 51.1 in May, indicating a downturn in employment in the manufacturing sector.
Meanwhile, the new orders index jumped to 49.3 in June from 45.4 in May, although the reading below 50 still indicates contraction.
\"Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions,\" said Timothy R. Fiore, Chair of ISM Manufacturing Business Survey Committee.
He added, \"Production execution was down compared to the previous month, likely causing revenue declines, putting pressure on profitability.\"
On the inflation front, the ISM said the prices index tumbled to 52.1 in June from 57.0 in May, suggesting a slowdown in the pace of price growth.
The ISM is scheduled to release a separate report on U.S. service sector activity in the month of June on Wednesday. The services PMI is expected to dip to 52.5 in June from 53.8 in May.