People in India carrying out online stock trading in the US market need to know those sectors that are strong. The manufacturing sector did well in June 2016, according to a report by the Institute for Supply Management (ISM).
ISM Report Spells Optimism
It was the fourth straight month of expansion for the sector. It was also the month that saw the highest reading for the sector in 16 months. There was continued improvement in the outlook for production and new orders. ISM’s manufacturing index rose to the figure of 53.2 in June, from 51.3 in May. Any figure above 50 is an indication of growth.
The report indicates that factories in the US are recouping and getting more stable after being hit by a rising dollar at the beginning of 2015 coupled with poor global economic growth and hampered oil production. The ISM index was below 50 right from October to February. In March the index began rebounding. Factories were able to adapt as the appreciation of the dollar stabilized and oil prices stopped their further plunge. This ISM report is clearly an indication of the manufacturing sector finally beginning to recover from its woes.
A Complete Turnaround Unlikely Yet
Still, it comes short of a complete turnaround. Global demand continues to appear weak, which means a total turnaround isn’t likely to occur in the following months. Besides, there are other indicators which seem to reveal that manufacturing in the US is still in its struggling phase:
- The Labor Department reveals that 53,000 employees were let go by manufacturers since January 2016. ISM’s index had also indicated the shedding of workers by factories till last month.
- The Federal Reserve’s manufacturing output measure dropped 0.4% in May. Auto factories were particularly those that saw a decrease in production.
- Orders to factories manufacturing long-lasting goods in the US also slipped in May while the Commerce Department revealed that demand for durable goods from US factories slipped 2.2% in May while it had actually risen 3.3% and 2% in April and March respectively.
Though these factors give room for concern and prevent the US economy from marching all out ahead, the situation is still getting reasonably optimistic. The employment measure has started turning positive after contraction in the previous months. Out of the 18 manufacturing industries, 13 reported growth in May, among which were textiles and primary metals. And with the ISM surveying around 200 companies in the US each month, it is a sign that the gradual path to a turnaround may have been laid.
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