The Institute for Supply Management released a report on Thursday showing U.S. manufacturing activity contracted at a slightly faster rate in the month of May.
The ISM said its manufacturing PMI slipped to 46.9 in May from 47.1 in April, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 47.0.
“The May composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period,” said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee. “However, there is clearly more business uncertainty in May.”
The modest decrease by the headline index partly reflected an accelerated contraction in new orders, as the new orders index slid to 42.6 in May from 45.7 in April.
Meanwhile, the report said the production index increased to 51.1 in May from 48.9 in April, indicating a return to expansion after five consecutive months of contraction.
The employment index also rose to 51.4 in May from 50.2 in April, pointing to modest job growth in the manufacturing sector.
On the inflation front, the ISM said prices index tumbled to 44.2 in May from 53.2 in April, suggesting a decrease in raw materials prices.
The ISM is scheduled to release a separate report on U.S. service sector activity in the month of May next Monday. The services PMI is expected to dip to 51.5 in May from 51.9 in April, although a reading above 50 would still indicate growth.
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