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Area Development - Site Selection, Facility Planning and Workforce Development

ISM Report: U.S. Manufacturing Growth Slowed Down in May

06/03/2011
The manufacturing sector's economic activity expanded in May for the 22nd consecutive month and the overall economy grew for the 24th consecutive month, according to information supplied by U.S. supply executives in the latest "Report On Business" produced by The Institute for Supply Management (ISM).

However, this is a highly cautionary tale, as this month's index registered 53.5 percent, a decrease of 6.9 percentage points when compared to April's reading of 60.4 percent. (A reading above 50 percent indicates that the manufacturing economy is generally expanding. noted ISM, and below 50 percent indicates it is generally contracting.)

"Elevated commodity prices, slowing global growth, and an increasingly questionable outlook for the U.S. economy are creating headwinds for the factory sector which thus far has been the one strong element in an otherwise sluggish U.S. economic rebound," said Cliff Waldman, economist with the trade group Manufacturers Alliance/MAPI (source: Associated Press).

May's numbers also represent the lowest PMI reported in the past 12 months and the first reading under 60 percent for 2011. Primarily May's lower PMI reading can be attributed to fewer new orders, and therefore slower production.

Bradley J. Holcomb, chair of ISM's Manufacturing Business Survey Committee, said manufacturing employment "continues to show good momentum for the year, as the Employment Index registered 58.2 percent, which is 4.5 percentage points lower than the 62.7 percent reported in April. Manufacturers continue to experience significant cost pressures from commodities and other inputs."

Of the 18 manufacturing industries, 14 reported growth in May: Nonmetallic Mineral Products; Petroleum & Coal Products; Machinery; Transportation Equipment; Computer & Electronic Products; Textile Mills; Electrical Equipment, Appliances & Components; Primary Metals; Miscellaneous Manufacturing; Paper Products; Chemical Products; Plastics & Rubber Products; Apparel, Leather & Allied Products; and Fabricated Metal Products.

Three industries reporting contraction in May were: Printing & Related Support Activities; Furniture & Related Products; and Food, Beverage & Tobacco Products.

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