The numbers: The Institute for Supply Management’s Manufacturing PMI, a closely followed index of U.S.-based manufacturing activity, rose to 56.1% in May from 55.4% in the prior month, the research group said Wednesday.
Given the weakness in the regional manufacturing surveys in May, economists polled by The Wall Street Journal had forecast a decline to 54.5%.
Any number above 50% signifies growth. The index has been above the breakeven rate for two years.
Key details: The index for new orders rose 1.6 percentage points to 55.1% in May. Employment slumped 1.3 percentage points to 49.6%. Prices fell 2.4 percentage points to 82.2%.
All of the six biggest manufacturing industries registered moderate-to-strong growth in May.
Big picture: Manufacturing improved even though global supply chains have dampened activity.
Another measure of manufacturing, the S&P Global U.S. manufacturing PMI, fell to 57 in May, its lowest level in four months. That’s down from 59.2 in April and a “flash” May reading of 57.5. Cost inflation accelerated to the fastest pace in six months even though delivery delays were the least widespread in 16 months, said Chris Williamson, chief business economist at S&P Global Market Intelligence.
What ISM said: ” Demand is really good,” said Timothy Fiore, chair of the ISM survey committee. There is some sense that higher interest rates are slowing down home building, but that was expected, he added. Firms are having more trouble hiring rather than anything related to a slowdown of activity.
What economists are saying: “Fears of a near-term rollover in the sector look overdone, though we think that the ISM index will soften over the next few months before recovering somewhat in the fall,” said Ian Shepherdson, chief economist at Pantheon Macro.