U.S. manufacturing saw an estimated 8,000 jobs lost last month, according to data released by the Bureau of Labor Statistics (BLS) on Friday. And U.S. textile mills are among the stateside producers that reported an economic contraction in June amid the overall compression in the manufacturing environment.
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According to the Institute for Supply Management ’s latest Manufacturing ISM Report On Business—based on a June survey of purchasing and supply executives, including those working in textile mills as well as apparel, leather and allied products—new orders, production and employment are all tightening.
“ U.S. manufacturing activity continued in contraction at the close of the second quarter,” said Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee, commenting on the overall manufacturing trends. “Demand was weak again, output declined and inputs stayed accommodative.”
ISM’s Manufacturing PMI, an index that reflects sentiment on new orders, production, employment, supplier deliveries and inventories, was at 48.5 percent in June. Although this represented a 0.2 percentage point drop from May’s figure, Fiore noted that aside from a dip in April 2020, the index has steadily remained over 42.5 percent for 50 months now, a sign of overall economic expansion in the nation over this period.
Bucking the broader trend of lower manufacturer-held inventory, textile mills said their inventories were higher in June. Apparel and leather goods producers along with textile mills said their customers’ inventories were “too high” in last month, in contrast to the overall decreasing index.
The New Orders Index was at 49.3 percent in June, falling below the threshold that separates growth from contraction. This was, however, above May’s 45.4 percent index. Textile mills were among the respondents that said new orders had declined. “Panelists’ comments noted a continued level of uncertainty and cautiousness as new order levels and customer inventory accounts continue to underperform,” said Fiore.
Amid slower ordering, manufacturers—including textile mills—also noted continued declines in order backlogs, a trend that has held for 21 months.
Fabric producers also reported lower production, falling into the broader experience of a production decline as the ISM Production Index decreased to 48.5 percent in June from 50.2 percent the prior month.
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Also on the decline is employment with a 49.3 percent index, following May’s 51.1 percent index that countered a seven-month-long trend of contraction. Textile firms were among those pulling back on employment last month. ISM said its cross-industry panel are enacting hiring freezes, layoffs and other methods to cut head counts.
Another economic pressure is rising raw material prices, as the ISM Prices Index saw its sixth month of growth in June, with textile mills among those reporting higher input costs. However, the growth slowed from 57 percent in May to 52.1 percent in June.
“Demand remains subdued, as companies demonstrate an unwillingness to invest in capital and inventory due to current monetary policy and other conditions,” said Fiore. “Production execution was down compared to the previous month, likely causing revenue declines, putting pressure on profitability.”
“As we’ve regularly said for the past 18 months, the combination of an overly strong dollar and high interest rates are dampening factory jobs growth,” Alliance for American Manufacturing president Scott Paul said Friday following the release of the BLS data. “June’s numbers bear that out, with a net loss of 8,000 manufacturing jobs. Until the Federal Reserve changes course, we can expect to see a stalled factory sector.”
“We’re also concerned about the growing and persistent trade deficit in goods. It shows we still have a lot of work to do to build reshoring efforts,” he added. According to the U.S. Census Bureau’s Wednesday numbers, the U.S. goods deficit grew by $0.9 billion to $100.2 billion in May.
This article has been updated to reflect BLS data and comments from Scott Paul.
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