Economy

ISM: Manufacturing Report on Business Shows Tepid Growth in May

The Institute for Supply Management’s Manufacturing Report On Business Survey. (Photo: REUTERS)

The Institute for Supply Management’s Manufacturing Report on Business shows the manufacturing sector expanded in May for the third consecutive month. However, while the overall economy grew for the 84th consecutive month, manufacturing has lagged behind.

“The May PMI registered 51.3 percent, an increase of 0.5 percentage point from the April reading of 50.8 percent,” Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee. “The New Orders Index registered 55.7 percent, a decrease of 0.1 percentage point from the April reading of 55.8 percent. The Production Index registered 52.6 percent, 1.6 percentage points lower than the April reading of 54.2 percent.”

MANUFACTURING AT A GLANCE MAY 2016
Index	Series Index May	Series Index Apr	Percentage Point Change	Direction	Rate of Change	Trend* (Months)
PMI^®	51.3	50.8	+0.5	Growing	Faster	3
New Orders	55.7	55.8	-0.1	Growing	Slower	5
Production	52.6	54.2	-1.6	Growing	Slower	5
Employment	49.2	49.2	0.0	Contracting	Same	6
Supplier Deliveries	54.1	49.1	+5.0	Slower	From Faster	1
Inventories	45.0	45.5	-0.5	Contracting	Faster	11
Customers’ Inventories	50.0	46.0	+4.0	Unchanged	From Too Low	1
Prices	63.5	59.0	+4.5	Increasing	Faster	3
Backlog of Orders	47.0	50.5	-3.5	Contracting	From Growing	1
New Export Orders	52.5	52.5	0.0	Growing	Same	3
Imports	50.0	50.0	0.0	Unchanged	Same	2
OVERALL ECONOMY				Growing	Faster	84
Manufacturing Sector				Growing	Faster	3

Manufacturing ISM^® Report On Business^® data is seasonally adjusted for New Orders, Production, Employment and Supplier Deliveries indexes.

*Number of months moving in current direction.

Still, the ISM’s closely-watched gauge of manufacturing activity nationwide follows regional data indicating contraction. Earlier this week, the Chicago Business Barometer, the ISM’s gauge of Midwest manufacturing, fell in May to 49.3 from 50.4 the month prior. The Empire State Manufacturing Survey plummeted in May further into contraction, as well.

“The Employment Index registered 49.2 percent, the same reading as in April. Inventories of raw materials registered 45 percent, a decrease of 0.5 percentage point from the April reading of 45.5 percent,” Mr. Holcomb said. “The Prices Index registered 63.5 percent, an increase of 4.5 percentage points from the April reading of 59 percent, indicating higher raw materials prices for the third consecutive month. Manufacturing registered growth in May for the third consecutive month, as 14 of our 18 industries reported an increase in new orders in May (down from 15 in April), and 12 of our 18 industries reported an increase in production in May (down from 15 in April).”

Of the 18 manufacturing industries, 12 are reporting growth in May in the following order: Wood Products; Textile Mills; Printing & Related Support Activities; Fabricated Metal Products; Paper Products; Plastics & Rubber Products; Computer & Electronic Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Machinery; and Primary Metals. The six industries reporting contraction in May — listed in order — are: Apparel, Leather & Allied Products; Petroleum & Coal Products; Transportation Equipment; Nonmetallic Mineral Products; Chemical Products; and Furniture & Related Products.

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