The numbers: The ISM barometer of American factories fell 3.1 points to a two-year low of 53% in June in another sign the U.S. economy is slowing. High inflation is still a big problem, but price pressures also eased for the fourth month in a row.
Economists polled by The Wall Street Journal forecast the index to fall to 54.3% from 56.1% in the prior month.
The report, compiled by the Institute for Supply Management, is seen as a mirror of the health of the U.S. economy. While any number above 50% signifies growth, the June reading was the weakest since June 2020.
Big picture: Manufacturers are still operating at high capacity, but business is not growing quite as rapidly as it was last year.
Ongoing shortages of supplies and labor are part of the problem, but customers have also scaled back their orders because of high prices and worries about the future of the economy.
Market reaction: The Dow Jones Industrial Average
and S&P 500
rose slightly in Friday trades, but a recent mini-rally appears to have fizzled out and left markets well below their all-time highs.