Growth in activity in the U.S. manufacturing sector unexpectedly accelerated in the month of June, according to a report released by the Institute for Supply Management on Monday.
The ISM said its purchasing managers index climbed to 60.2 in June after rising to 58.7 in May, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to edge down to 58.4.
The unexpected increase by the headline index was partly due to an acceleration in production growth, as the production index rose to 62.3 in June from 61.5 in May.
On the other hand, the new orders index slipped to 63.5 in June from 63.7 in May, although the reading above 60 still indicates strong demand.
The employment index also dipped to 56.0 in June from 56.3 in May, suggesting a modest slowdown in the pace of job growth in the manufacturing sector.
The ISM also said the supplier deliveries index jumped to 68.2 in June from 62.0 in May, indicating the delivery performance of suppliers to manufacturing organizations was markedly slower.
"Demand remains robust, but the nation's employment resources and supply chains continue to struggle," said Tim Fiore, Chair of the ISM Manufacturing Business Survey Committee.
He added, "Respondents are overwhelmingly concerned about how tariff related activity is and will continue to affect their business."
With regard to inflation, the report said the prices index fell to 76.8 in June from 79.5 in May, pointing a slowdown in the pace of price growth.
The ISM is scheduled to release a separate report on activity in the service sector in the month of June on Thursday. The index of activity in the sector is expected to dip to 58.2 in June from 58.6 in May.