The Purchasing Managers' Index (PMI) stood at 52.6 percent in June, up 9.5 percentage points from the May reading. Any reading below 50 percent indicates the manufacturing sector is generally contracting.
"As predicted, the growth cycle has returned after three straight months of COVID-19 disruptions," Timothy Fiore, chair of the ISM's manufacturing business survey committee, said in a statement.
Among the six biggest industry sectors, food, beverage & tobacco products remains the best performing industry sector, and computer & electronic products, and chemical products returned to respectable growth, Fiore said.
Transportation equipment and fabricated metal products continue to contract, but at much softer levels, according to the statement.
"Today's report is clearly positive news for the factory sector, but the jump may just reflect the relief about reopening rather than signal a full rebound for a sector that still faces major headwinds," Tim Quinlan and Sarah House, economists at Wells Fargo Securities, wrote in an analysis.
"Orders surged from a low base and while factories aren't firing people, they're not yet hiring either," they noted.
According to the minutes of the Federal Reserve's June policy meeting released Wednesday, Fed officials discussed the risks of additional waves of COVID-19 outbreaks on the U.S. economy as states continued reopening efforts.
"A number of participants judged that there was a substantial likelihood of additional waves of outbreaks, which, in some scenarios, could result in further economic disruptions and possibly a protracted period of reduced economic activity," said the minutes of the Fed's meeting held on June 9-10.
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