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ISM: U.S. manufacturing activity held steady in May, with employment, new orders showing growth

Posted by IndustryNet on Thursday, June 1, 2017

100000039_GRANDMANew data from the Institute for Supply Managment released this morning shows manufacturing activity in the U.S. inched up in May. The ISM's latest Manufacturing Report on Business, a leading economic indicator based on a survey of the nation's supply executives, shows U.S. manufacturing activity rose 0.1% to 54.9% in May, from 54.8% in April, marking the sector's ninth consecutive month of growth.

A reading of 50% or higher indicates expansion.

Growth was reported in fifteen of the eighteen manufacturing industries surveyed by the ISM, and included nonmetallic mineral products; furniture & related products; plastics & rubber products; machinery; primary metals; food, beverage & tobacco; and electrical equipment. Apparel, leather & allied products as well as textile mills were the only two industries to indicate contraction.

Overall, the ISM manufacturing activity report for May shows continued strength in the U.S. industrial sector, with multiple sub-sectors reporting sustained growth. New orders, inventories, and employment remain in expansion territory, reports the ISM, though supplier deliveries are slowing and prices are on the rise.

New Orders & Employment

The New Orders Index registered 59.5%, up 2% from April’s reading of 57.5. The employment index jumped 1.5% to a reading of 53.5% in May – marking the sector’s eighth straight month of gains.

Inventories

Inventories held steady at 51.5% reports the ISM, up a half percent from April. Sectors reporting increased inventories included transportation equipment, rubber & plastics; furniture; and food, beverage & tobacco products.

Export growth

The ISM’s Export Index continues to grow, though at a slower rate, registering 57.5% in May, compared to 59.5% in April. Eleven out of eighteen industries reported increased exports in May, with only computer/electronic products and fabricated metal products reporting decreases.

Production and prices increase at a slower rate

The ISM’s Production Index fell 1.5% to 57.1% in May – though industrial production remains in its ninth straight month of expansion Fourteen out of nineteen industries reported an uptick in production, with only apparel/leather/allied products showing contraction. The Prices Index fell 8 percentage points to 60.5% in May, with 30% of respondents reporting paying higher prices in May, compared to 44% paying higher prices in April. Nine percent reported paying lower prices in May; and 60% paid the same, according to the ISM’s survey. The ISM reports the primary metals industry was the only to report paying lower prices.

Supplier Deliveries Slow

The ISM’s Supplier Delivery index decelerated in May to 53.1% from 55.1% in April, marking the 13th consecutive month that supplier delivery to manufacturers has slowed. Eleven out of the eighteen industries surveyed by the ISM reported slower deliveries from their suppliers and six reported no change.

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