TEMPE, AZ – Economic activity in the manufacturing sector contracted in June for the first time since July 2009, says the Institute for Supply Management.

The June PMI was 49.7%, down 3.8 percentage points. New orders dropped a staggering 12.3 percentage points to 47.8% compared to May. Production registered 51%, down 4.6 points, and inventories were down 2 points to 44%. Customer inventories were up 5 percentage points to 48.5%, while backlogs were 44.5%, down 2.5 points.

“The PMI registered 49.7%, a decrease of 3.8 percentage points from May’s reading of 53.5%, indicating contraction in the manufacturing sector for the first time since July 2009, when the PMI registered 49.2%. The New Orders Index dropped 12.3 percentage points in June, registering 47.8% and indicating contraction in new orders for the first time since April 2009, when the New Orders Index registered 46.8%. The Production Index registered 51%, and the Employment Index registered 56.6%. The Prices Index for raw materials decreased significantly for the second consecutive month, registering 37%, which is 10.5 percentage points lower than the 47.5% reported in May. 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,” said Bradley J. Holcomb, ISM spokesperson.

The overall economy grew for the 37th consecutive month, says ISM.