U.S. Manufacturing Index Rebounds Modestly In May

Manufacturing activity in the U.S. contracted at a slightly slower rate in the month of May, according to a report released by the Institute for Supply Management on Monday.

The ISM said its purchasing managers index rose to 43.1 in May from 41.5 in April, coming in just below economist estimates for a reading of 43.6.

While the index rebounded from its lowest level since April of 2009, a reading below 50 still indicates a contraction in manufacturing activity.

Nonetheless, Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, said the latest figure indicates expansion in the overall economy after April’s contraction.

The modest rebound by the headline index came as the new orders index jumped to 31.8 in May from 27.1 in April and the production index surged up to 33.2 from 27.5.

The employment index also spiked to 32.1 in May from 27.5 in April, although the reading below 50 indicates the tenth consecutive month of contraction in employment in the manufacturing sector.

On the inflation front, the prices index rebounded to 40.8 in May from 35.3 in April, indicating prices decreased at a slower rate.

“May appears to be a transition month, as many panelists and their suppliers returned to work late in the month,” Fiore said.

He added, “However, demand remains uncertain, likely impacting inventories, customer inventories, employment, imports and backlog of orders.”

The ISM is scheduled to release a separate report on activity in the service sector in the month of May on Wednesday. The non-manufacturing index is expected to rise to 44.0 in May from 41.8 in April.

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