Midwest Manufacturing Ticks Up in June, But Remains in Contraction

The Chicago Business Barometer found Midwest manufacturing activity rose in June, but remained in contraction for the second consecutive month. Also known as the Chicago PMI, the ISM survey increased to 49.4 in June, up from the abysmal 46.2 measured in May.

It marked the fourth month this year the index was below 50, which is the threshold dividing expansion from contraction.

“While the latest increase in new orders is a tentative sign of a pickup in demand over the coming months, there is no getting away from the general softness in the data,” said Philip Uglow, chief economist of MNI Indicators. “The Barometer hit a 5½ year low in Q2 and the weakness is having a detrimental impact on the level of hiring.”

Manufacturing activity continues to weaken in the second quarter after an already-depressed opening three months of the year, according to the index. While some sectors are showing relatively higher strength, it doesn’t bode well for an economy that contracted in the first quarter by 0.2 percent.

June’s increase was fueled by new orders and projection subindexes, which rose 8.8 percent and 8.7 percent, respectively. However, those were literally the only optimistic bullet points in the report.