NEW YORK – The overall economy grew for the twenty-fifth straight time, while the manufacturing sector expanded for the twenty-third time, the Institute for Supply Management reported Friday.
According to the ISM’s monthly report on business, the ISM index climbed to 55.3 in May from 53.5 in May.
Economists polled by Thomson Reuters predicted the index would slip to 51.9.
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 55.3 percent, an increase of 1.8 percentage points from May, indicating expansion in the manufacturing sector for the 23rd consecutive month," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. “New orders and production were both modestly up from last month, and employment showed continued strength with an increase of 1.7 percentage points to 59.9 percent. The rate of increase in prices slowed for the second consecutive month, dropping 8.5 percentage points in June to 68 percent. This follows a similar reduction of 9 percentage points in the Prices Index in May, and is the lowest figure since August 2010 when the index registered 61.5 percent. While the rate of price increases has slowed and the list of commodities up in price has shortened, commodity and input prices continue to be a concern across several industries.”
The closely watched prices paid index slid to 68.0 from 76.5. The employment index was at 58.2, down from 62.7 the prior month.
The production index increased to 54.5 from 54.0, the new orders index rose to 51.6 from 51.0; the supplier deliveries index gained to 56.3 from 55.7; the export orders index decreased to 53.5 from 55.0; and the imports index fell to 51.0 from 54.5.
The inventories index increased to 54.1 from 48.7; the customers’ inventories index jumped to 47.0 from 39.5; and backlog of orders slumped to 49.0 from 50.5.
Respondents’ comments included:
“We continue to see inflation, though at a reduced rate [compared] to earlier months.” (Chemical Products)
“Slight slowdown in overall business in both domestic and international markets, although still above 2010 at the same time.” (Electrical Equipment, Appliances & Components)
“The earthquake and related issues in Japan have caused shortages of some automotive equipment, negatively impacting global automotive production.” (Fabricated Metal Products)
“Sales continue to be stronger than expected across both retail and industrial channels. Material costs are definitely rising and will force increases to end-use customers.” (Paper Products)
“High commodity prices continue to be worrisome.” (Food, Beverage & Tobacco Products)
“Business is still up and down, with no real upside potential for us until the housing market rebounds.” (Furniture & Related Products)
“Customers are still being cautious with their buying. Certain plastics and metal prices continue to rise.” (Machinery)
