NEW YORK – The overall economy grew for the twenty-fourth straight time, while the manufacturing sector expanded for the twenty-second time, the Institute for Supply Management reported Wednesday.
According to the ISM’s monthly report on business, the ISM index dipped to 53.5 in May from 60.4 in April.
Economists polled by Thomson Reuters predicted the index would slip to 58.0.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
“The PMI registered 53.5 percent and indicates expansion in the manufacturing sector for the 22nd consecutive month," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. “This month's index, however, registered 6.9 percentage points below the April reading of 60.4 percent, and is the first reading below 60 percent for 2011, as well as the lowest PMI reported for the past 12 months. Slower growth in new orders and production are the primary contributors to this month's lower PMI reading. Manufacturing employment continues to show good momentum for the year, as the Employment Index registered 58.2 percent, which is 4.5 percentage points lower than the 62.7 percent reported in April. Manufacturers continue to experience significant cost pressures from commodities and other inputs.”
The closely watched prices paid index slid to 76.5 from 85.5. The employment index was at 58.2, down from 62.7 the prior month.
The production index decreased to 54.0 from 63.8, the new orders index fell to 51.0 from 61.7; the supplier deliveries index dipped to 55.7 from 60.2; the export orders index decreased to 55.0 from 62.0; and the imports index fell to 54.5 from 55.5.
The inventories index decreased to 48.7 from 53.6; the customers’ inventories index dipped to 39.5 from 40.5; and backlog of orders slumped to 50.5 from 61.0.
Respondents’ comments included:
"Chemical prices are under increasing cost pressure, driven by feedstock and transportation costs." (Chemical Products)
"Continued growth through beginning of second quarter, with strong backlog and outlook for at least the next three months." (Electrical Equipment, Appliances & Components)
"Business levels remain strong — better than last year by 20+ percent, but not back to 2008 or early 2009 levels." (Fabricated Metal Products)
"Demand remains strong; however, inflation is evident everywhere in virtually every material purchased." (Paper Products)
"Bad weather is impacting retail business." (Printing & Related Support Activities)
"Business is still strong, but we are more aware of a possible softening than previously." (Machinery)
