What does the ISM survey suggest about the state of the manufacturing sector?

The ISM survey indicates a slight improvement in the manufacturing sector, but it remains in a contractionary phase. Here are the key insights from the survey:

1. **PMI Improvement**: The ISM Manufacturing PMI for June 2025 improved from 48.5 in May to 49.0, suggesting a slight increase in economic activity. However, the PMI remaining below 50 indicates that the sector is still in contraction.
2. **New Orders and Backlogs**: New orders and backlogs contracted for the fifth consecutive month, reflecting ongoing challenges in demand. The ISM New Orders Index was at 43.7 in June, indicating a significant decline in new business opportunities.
3. **Production and Employment**: Production grew, but employment contracted, with the Employment Index registering at 49.0, indicating a slight improvement but still reflecting job losses in the sector.
4. **Supplier Deliveries and Inventories**: Supplier deliveries slowed, and raw materials inventories contracted, suggesting supply chain disruptions are persisting. Customers' inventories are reported to be too low, which could lead to further production pressures as companies aim to restock.
5. **Prices and International Trade**: Prices continued to increase, and both exports and imports contracted, which could impact global trade dynamics and inflationary pressures.

In conclusion, while there are some positive signs of improvement in specific aspects of the manufacturing sector, the overall picture suggests that the sector is continuing to face significant challenges, particularly in demand and employment. The contraction in new orders and the ongoing issues with supplier deliveries and inventories indicate that the sector may face difficulties in the near term.