The Institute for Supply Management reported that the nation’s manufacturing sector contracted at the fastest pace in nearly four years, the overall index falling from 50.7 in April to 49.0 in May, below the 50 level that separates expansion from contraction.
The new orders component fell to its lowest level in almost a year, down from 52.3 to 48.8, indicating that an imminent reversal of the current downward trend is unlikely.
Production plunged from 53.5 in April to 48.6 in May as manufacturers continued to work down their backlog orders, this component falling from 53.0 to 48.0, and both inventories and supplier deliveries showed ongoing contraction, but at a slower pace. The employment sub-index fell from 50.2 to 50.1, indicating only the slightest expansion, and prices paid fell from 50.0 to 49.5, consistent with recent reports of disinflation in consumer prices.
While the index readings are not far below the sub-50 contraction level, this is still the worst report on U.S. manufacturing since shortly after the recession ended.
Source: Iacono Research
