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Manufacturing Expands in May on New Orders, Output

By Bill Koenig
Senior Editor

The US manufacturing economy expanded for a third consecutive month in May, bolstered by an increase in new orders and production, the Institute for Supply Management said in a monthly report.

The institute’s PMI, which measures economic activity in manufacturing, was 51.3% in May, an improvement from April’s 50.8% but not quite as good as March’s 51.8%.

The report by ISM (Tempe, AZ) is based on a survey of purchasing and supply executives. A reading above 50% indicates expansion and below 50% contraction. The current three-month streak above 50% follows a five-month streak of economic contraction.

The PMI has averaged 50.3% for the past 12 months. Its peak during that period was 53.1% in June 2015.

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Of 18 industries, 12 reported economic growth last month, including wood products, textiles, fabricated metal products, miscellaneous manufacturing, machinery and primary metals. Six industries reported contraction, including apparel, petroleum & coal products and transportation equipment.

The latter industry has been a bright spot for manufacturing in the past year amid continued strong vehicle sales, especially light trucks. The institute said respondents to its survey indicated the sector is experiencing slowing business.

The institute’s New Orders Index was 55.7% in April, down slightly from 55.8% in April. ISM said 14 industries reported increases in new orders, including textiles, miscellaneous manufacturing, primary metals, fabricated metal products, machinery and electrical equipment. Four experienced a cut in orders, including transportation equipment, petroleum & coal products and furniture.

The group’s Production Index last month was 52.6%, cooling off from 54.2% in April. Twelve industries had increases in output, including wood products, primary metals, fabricated metal products, petroleum & coal products, miscellaneous manufacturing and machinery. Six industries posted decreases, including apparel, transportation equipment and furniture.

Both the New Orders and Production indexes shown expansion for five consecutive months.

ISM’s Employment Index was 49.2% in May, the same as April. Ten industries reported employment growth, including textiles, primary metals, miscellaneous manufacturing and machinery. Six sectors reported employment losses, including apparel, petroleum & coal products and fabricated metal products.

The Employment index has indicated contraction for six consecutive months.

Published Date : 6/1/2016

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