Factories struggle in June, hiring slows: Markit

NEW YORK Thu Jun 20, 2013 9:00am EDT

Ford Assembly workers install a battery onto the chassis of a Ford Focus Electric vehicle at the Michigan Assembly Plant in Wayne, Michigan November 7, 2012. REUTERS/Rebecca Cook

Ford Assembly workers install a battery onto the chassis of a Ford Focus Electric vehicle at the Michigan Assembly Plant in Wayne, Michigan November 7, 2012.

Credit: Reuters/Rebecca Cook

NEW YORK (Reuters) - Manufacturing activity growth slowed slightly in June as the pace of hiring and overseas demand weakened, making the second quarter the weakest for the sector in the last four, a survey showed on Thursday.

Financial data firm Markit said its "flash," or preliminary, U.S. Manufacturing Purchasing Managers Index fell to 52.2 in June from 52.3. A reading above 50 indicates expansion.

June's 52.2 reading was also the average for the second quarter, behind the 54.9 average in the first three months of the year and the worst showing since the third quarter of 2012.

"Slower growth in the goods-producing sector looks likely to have acted as a drag on the wider economy," said Markit chief economist Chris Williamson. The U.S. economy grew at a 2.4 percent rate between January and March.

Markit's output index rose to 53.9, a three-month high, from 52.7 in May while the gauge of new orders also rose to its highest level since March, offering some hope. But the pace of hiring slowed to 50.4 from 52.6, reflecting the weakest rate of job creation since January 2010.

"Companies are certainly circumspect about any sustained revival of demand," said Williamson, who added that employment was also being suppressed by "the need to boost productivity, especially with intensifying competition from overseas and in export markets."

New export orders contracted for a second straight month, with overall demand from customers abroad at its weakest since October 2012.

The "flash" 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.

(Reporting By Steven C. Johnson; Editing by Chizu Nomiyama)

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