June U.S. Manufacturing Contracts For First Time In Nearly 3 Years

By Roland Li | July 02 2012 12:38 PM

U.S. manufacturing contracted in June for the first time since July 2009 as demand fell amid the euro zone crisis, according to Institute for Supply Management data released Monday.

REUTERS

As the risk of a messy Greek exit from the euro and a general breakup of the euro zone spark global slowdown fears, panicked investors have fled the troubled euro to safe havens such as U.S. treasuries and, crucially, the dollar.

Sponsorship Link

The ISM's index fell to 49.7 from 53.5, below a Bloomberg forecast of 52. Numbers below 50 indicate contraction; above 50, an expansion.

The outlook was mixed. 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, the ISM said.

New orders fell sharply to 47.8 in June from 60.1 in May, the largest decline since October 2001, in the aftermath of the 9/11 terrorist attacks. The report's employment index was down slightly to 56.6 from 56.9.

Inventory was down to 44.0 from 46.0, while exports fell to 47.5 from 53.5 in the prior month.

Separately, construction spending rose in May by 0.9 percent as the housing sector improved, according to the Commerce Department. The value of construction projects rose to an annual rate of $830 billion, the greatest level since December 2009. The result beat a Bloomberg forecast of 0.2 percent.