ISM Manufacturing Data Signal Much Weaker Growth in May

robotsThe manufacturing sector in the United States has now expanded for the 12th consecutive month. The data for May from the Institute for Supply Management (ISM) and actually signal that the overall economy grew for the 60th consecutive month. Unfortunately, that is where the good news stops.

Monday's ISM report on business reading fell by 1.7 percentage points to 53.2% in May, versus April. April's reading of 54.9 was expected to grow to 55.5 in May, according to the Bloomberg consensus. So instead of growing by 0.6%, then it fell by 1.7 points. Sadly, this was even under all estimates, as the Bloomberg range was represented as 54.6 to 56.6.

Of the 18 manufacturing industries, 17 reported growth in May. The ISM signaled that its panel reflected generally steady growth, but they did signal that some areas of concern arising as a result of raw materials pricing, supply tightness and shortages.

This report may raise some eyebrows. We do have to keep in mind that America is not really a manufacturing economy, but we also need to keep in mind that there are real risks in the recovery's strength. It just doesn't feel as though there is a big snapback in GDP after a negative reading for the first quarter of 2014.

More data is as follows:

  • The New Orders Index registered 53.3%, a decrease of 1.8 percentage points from the 55.1% reading in April, indicating growth in new orders for the 12th consecutive month.
  • The Production Index registered 55.2%, 0.5 percentage point below the April reading of 55.7%.
  • Employment grew for the 11th consecutive month, registering 51.9%, a decrease of 2.8 percentage points below April's reading of 54.7%.

ALSO READ: Sex and Drugs Could Add $800 Billion to U.S. GDP


Filed under: Economy

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