Food Industry Reports Growth, But Tariffs Loom Large in ISM Report

The food industry, the manufacturing sector, and the overall economy all continued their growth streak in June, according to the latest ISM report. However, tariff concerns are top of mind, and some food companies are moving some production to out-of-country facilities to avoid extra taxes.

The Purchasing Managers’ Index (PMI) rose 1.5 percentage points in June to reach 60.2%. That marks the 22nd consecutive month of manufacturing growth, and the 110th month of overall economic growth.

Here’s what the food, beverage, and tobacco industry reported for June:

• Growth in new orders

• Growth in production

• Growth in employment

• Slower supplier deliveries

• Higher raw materials inventories

• Customer inventories too low

• Increased prices for raw materials

• Decrease in order backlogs

• Growth in new export orders

• Growth in imports

The average lead time for capital expenditures remained unchanged, while the lead times for production materials and maintenance, repair, and operating supplies both decreased slightly.

Employment challenges had been the food industry’s main concern for the past several months. In June, this shifted to tariffs. Respondents that export to many different countries said that they planned to shift production around to avoid higher tariffs. They also noted “a sense of uncertainty due to potential trade wars.”