According to Reuters on the 3rd, the Institute for Supply Management (ISM) released data on the same day showing that the US manufacturing purchasing managers index (PMI) fell further in June, reaching the level when the country was just recovering from the first wave of COVID-19.

A US carmaker idled indefinitely, with workers leaving after a day shift (file photo)

According to Reuters on the 3rd, the Institute for Supply Management (ISM) released data on the same day showing that the US manufacturing purchasing managers index (PMI) fell further in June, reaching the level when the country was just recovering from the first wave of COVID-19. Economists have warned that a recession is looming due to high borrowing costs and weak demand.

3500/42M

3500/42M

The ISM data showed that the US manufacturing PMI fell to 46.0 in June from 46.9 in May, the lowest reading since May 2020. This marks the eighth consecutive month that the PMI has remained below the 50 threshold, indicating a contraction in the US manufacturing sector, which is the longest since the Great Recession. With both businesses and consumers more cautious, the ISM survey’s forward-looking new orders sub-index climbed to a still-sluggish 45.6 from 42.6 in May.

The ISM survey is consistent with recessionary trends. At present, US factories are facing higher borrowing costs caused by the Federal Reserve’s interest rate hike and inventory overhang caused by weak market demand, which has caused US manufacturing activity to shrink and factories to lay off workers. Andrew Hunter, economist at Capital Economics, warned that the combination of these factors added to the suspicion that a US recession was imminent.