Jim Young | Bloomberg | Getty Images
A worker uses a heat gun to smooth out the wrinkles on a car seat during production at the Lear Corp. manufacturing facility in Hammond, Indiana.
A measure of U.S. manufacturing activity surged in June likely as steel and aluminum tariffs caused disruptions to the supply chains, resulting in factories taking longer to deliver goods.
The Institute for Supply Management (ISM) said on Monday its index of national factory activity jumped to a reading of 60.2 last month from 58.7 in May. A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy.
“Demand remains robust, but the nation’s employment resources and supply chains continue to struggle,” said Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee. “Respondents are overwhelmingly concerned about how tariff-related activity is and will continue to affect their business.”
The United States is engaged in tit-for-tat trade tariffs with its major trade partners, including China, Canada, Mexico and the European Union. Analysts fear the tariffs could disrupt supply chains, undercut business investment and potentially wipe out the fiscal stimulus from a $1.5 trillion tax cut package.
President Donald Trump claims that the United States is being taken advantage of by its trade partners.
The ISM’s supplier deliveries sub-index soared 6.2 points to 68.2 last month. A lengthening in suppliers’ delivery time is normally associated with increased activity, which is a positive contribution to the ISM index.
The survey’s new orders index slipped as did the measure of factory employment. The prices paid index also fell last month.
U.S. financial markets were little move by the data.
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