Manufacturing PMI drops to 46.0 in June from 46.9 in May
Factory employment declines; companies reporting layoffs
Construction spending rises 0.9 in May on homebuilding

WASHINGTON, July 3 Reuters U.S. manufacturing slumped further in June, reaching levels last seen when the nation was reeling from the initial wave of the COVID19 pandemic, but price pressures at the factory gate continued to deflate, a silver lining for the economy.

Shrinking activity left factories resorting to layoffs, the survey from the Institute for Supply Management ISM showed on Monday. ISM Manufacturing Business Survey Committee Chair Timothy Fiore described the practise as happening to a greater extent than in prior months.

At face value, the ISM survey is consistent with an economy that is in recession. But the socalled hard data such as nonfarm payrolls, firsttime applications for unemployment benefits and housing starts, suggest the economy continues to grind along.

Risks of a downturn have, however, increased as businesses and consumers deal with the 500 basis points worth of interest rate increases from the Federal Reserve since March 2022, when the U.S. central bank embarked on its fastest monetary policy tightening campaign in more than 40 years.

This provides further reason to suspect that a recession is on the horizon, said Andrew Hunter, deputy chief U.S. economist at Capital Economics. The ISM survey adds to the evidence that core goods prices will start falling again soon….