US factory activity grows at slower pace in June

WASHINGTON: US manufacturing activity grew at a slower rate in June, survey data showed Wednesday, as businesses grappled with fallout from the Middle East war.

The Institute for Supply Management’s (ISM) manufacturing index came in at 53.3% in June, ticking down 0.7% points from May.

But the figure remains above the 50-percent mark separating growth from contraction.

“In June, 34% of the comments were positive and 66% negative,” said ISM survey chair Susan Spence in a statement.

“Among negative comments, the Iran war was mentioned in 31% and tariffs in 17%,” she added.

Many respondents also flagged price volatility as an issue for their companies.

US-Israeli strikes targeting Iran from late February had sparked Tehran’s retaliation in virtually blocking off access to the Strait of Hormuz. Oil prices surged, with added costs feeding through supply chains.

Energy costs have since eased amid a 60-day ceasefire as parties seek a final deal to end the conflict and reach agreement on Iran’s nuclear programme.

In June, the ISM said new orders grew for a sixth straight month, while prices were still rising too — although at a slower rate.

“The conflict in Iran has impacted pricing in every category of raw materials,” said a respondent in the chemical products sector.

“Especially, items that have a heavy concentration of oil in the components like our adhesives,” the respondent added.

Another survey respondent added that pressure from the Middle East conflict is triggering a “more conservative approach to capital expenditures.”