Manufacturing activity slows in June

NEW YORK (CNNMoney.com) -- Manufacturing activity expanded for the 11th straight month in June, according to a purchasing managers' survey released Thursday, but the rate of expansion slowed more than economists expected.

The Institute for Supply Management's (ISM) index of U.S. manufacturing dropped to 56.2 in June from 59.7 in May. The reading came in much lower than the slight decrease to 59 economists had expected, according to a Briefing.com consensus survey.

Despite the slowdown in growth, levels higher than 50 signal manufacturing growth, while readings below 50 indicate contraction.

"We are now 11 months into the manufacturing recovery, and given the robust nature of recent growth, it is not surprising that we would see a slower rate of growth at this time," said Norbert Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee.

"Comments from the respondents remain generally positive, but expectations have been that the second half of the year will not be as strong in terms of the rate of growth, and June appears to validate that forecast," he added.

The decline in manufacturing growth in June was largely due to a slowdown in new orders and production, the report showed.

ISM's new orders index dropped to 58.5 in June from 65.7 in April, driven by contraction in the machinery and wood products industries. The institute's production index fell to 61.4 from 66.6, led by declines in the wood products and apparel industries.

Overall, only three of the 18 manufacturing industries surveyed reported slower growth in June, while thirteen reported accelerated in growth.

Apparel and leather products, wood products and machinery all posted slower gains. Activity expanded most in the plastics and rubber products, transportation equipment, printing activities and computer and electronic industries.