WASHINGTON — Apparel manufacturing was one of nine industries that contracted in June, as the Institute for Supply Management’s monthly national report fell below 50 points last month for the first time since July 2009.

The Institute’s monthly survey of 350 executives across a broad spectrum of manufacturing industries, including apparel and textiles, showed that the overall manufacturing index fell 3.8 percent to 49.7 percent in June.

Bradley J. Holcomb, chairman of the ISM Manufacturing Business Survey Committee, said: “Comments from the panel range from continued optimism to concern that demand may be softening due to uncertainties in the economies in Europe and China.”

Nigel Gault, chief U.S. economist at IHS Global Insight, said, “The global slowdown caught up with U.S. manufacturing in June. The U.S. still looks in better shape than the rest of the world, but the headline ISM manufacturing index joined many similar indexes elsewhere in the world below the break-even 50 mark.”

Apparel, leather and applied products manufacturing ranked second on the list of nine industries reporting contraction in June. It was a sharp reversal from the industry’s performance in May, where it ranked third on the list of 13 industries showing growth in May.

The ISM’s new orders index fell 12.3 percent to 47.8 percent in June and the production index fell 4.6 percent to 51 percent. Apparel, leather and applied products manufacturing ranked 10th on the list of 10 industries reporting declines in orders, and fourth on the list of four industries reporting a decline in production. The employment index declined slightly last month by 0.3 percent to 56.6 percent, according to the ISM’s report. Apparel, leather and applied product manufacturing ranked second on the list of four industries reporting employment declines in June.

Gault said the one-month “reversal” in the orders index was the “steepest” since October 2001, following the 9/11 terrorist attacks on the U.S. However, he said, “Such a reversal, without an obvious trigger this time, suggests that some of the deterioration in orders may reflect volatility rather than a sudden collapse.”

He added that the “good news in the report was that input prices dropped at a faster pace in June that at any time since April 2009.” Falling gasoline prices and a pickup in new construction also add to Gault’s assessment that the economy is “not yet in recession territory,” despite the weak manufacturing report.

 

“The report suggest that, for the moment, the manufacturing recovery is out of steam,” he added. “Domestic demand growth is not sufficient to outweigh the headwinds from Europe and China.”

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