TEMPE, AZ -- Production in the US manufacturing sector rose 12.1 points between April and June, reaching 52.5%, according to the latest survey of the nation's supply executives.

The PMI index of manufacturing contracted but at a slower rate for the month. The index rose two points sequentially to 44.8%, said the Institute for Supply Management, which tracks the data. A reading above 50%  indicates that the manufacturing economy is generally expanding. The past relationship between the June PMI and the overall economy indicates corresponds to a 1.1% annualized increase in real GDP.

Overall, manufacturing failed to grow in June for the 17th consecutive month. The US economy grew, however, for the second consecutive month. 

The New Orders index registered 49.2%, down 1.9 points from May. An index above 48.8%, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

In a statement, ISM spokesman Norbert J. Ore said, "Manufacturing continues to contract at a slower rate, but the trends in the indexes are encouraging as seven of 18 industries reported growth in June. Most encouraging is the gain in the Production Index."

Ore also noted that "aggressive inventory reduction continues and indications are that the de-stocking cycle is at or near the end in most industries."

For the month, Customers' Inventories remained below 50% for the third consecutive month. Prices were unchanged from May, indicating an improved supply/demand balance.

The sectors of Computer & Electronic Products and Electrical Equipment, Appliances & Components reported contraction during June.