The ISM index of manufacturing activity inched up to 49.8 in June from 49.4 in May.

It fell short of pushing above 50 as had been widely expected, said Jim Haughey, senior economist for Newport Communications.
"The monthly survey of industrial buyers by the Institute of Supply Management has now recovered about half of its decline from earlier this year," Haughey said. "This is a slight underestimate of freight volume, because foreign trade continues to rise and some sales are being made from inventory that requires moving final products."
The orders sub-index increased slightly to 52.2 and production to 52.9. Export orders rose more strongly to 54.8 as the impact of the recent dollar depreciation has begun to change buyers' sourcing decisions.
These three gains suggest that the overall index will continue rising this summer. The employment sub-index increased several points to 46.2, indicating that the pace of layoffs is subsiding. But the inventory reading dropped sharply to 41.3 as supply managers work off a small inventory bulge accumulated during the previous few months. This should be temporary, Haughey said.