NEW YORK (Reuters) - U.S. manufacturing grew in June at its slowest pace in 11 months and hiring in the sector slowed as overseas demand for U.S. products waned, an industry survey showed on Thursday.
Financial information firm Markit said its U.S. “flash” manufacturing Purchasing Managers Index fell to 52.9 from 54.0 in May. The June reading was the lowest since last July although it stayed above 50, indicating expansion in activity.
For the second straight month, weaker demand from Europe and large emerging markets such as China dented sales. Markit said U.S. manufacturers reported the second largest decline in new export orders since September 2009.
The index’s new orders component fell to 54.1 from 54.6.
Manufacturing has been one of the strongest links in an otherwise frail U.S. economic recovery, but Markit said weaker overseas demand may be starting to slow hiring in the sector.
The employment component fell in June to 53.1, reflecting the weakest rate of hiring in eight months. It stood at 54.3 at the end of May.
“The impact of weak sales on employment is a key concern,” said Markit chief economist Chris Williamson. “The close fit of the survey data with non-farm payroll number suggests that the official (employment) data for June will show a further weakening of the labor market.”
Job growth in the United States slowed sharply for a third consecutive month in May and the unemployment rate rose for the first time in nearly a year.
The “flash,” or preliminary reading, is based on replies from about 85 percent of the U.S. manufacturers surveyed. Markit’s final reading will be released on the first business day of the following month.
The Institute for Supply Management, which publishes a separate monthly manufacturing survey, releases its June index on July 2. ISM’s May index showed slower growth in the sector despite a sharp rise in new orders.
Reporting By Steven C. Johnson