The May Manufacturing PMI registered 46.9%, 0.2 percentage points lower than the 47.1% recorded in April, according to the Institute for Supply Management (ISM) Manufacturing Business Survey Committee. Regarding the overall economy, this figure indicates a sixth month of contraction after a 30-month period of expansion.
The New Orders Index remained in contraction territory at 42.6%, 3.1 percentage points lower than the figure of 45.7% recorded in April.
“The US manufacturing sector shrank again, with the Manufacturing PMI losing a bit of ground compared to the previous month, indicating a faster rate of contraction,” said Timothy R. Fiore, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.
“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. However, there is clearly more business uncertainty in May.”
Only four manufacturing industries reported growth in May, and this did not include apparel: Nonmetallic mineral products; furniture and related products; transportation equipment; and fabricated metal products.
Apparel, and leather and allied products were among the 11 industries reporting contracting inventories.
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The Supplier Deliveries Index indicated faster deliveries, and the Inventories Index dropped further into contraction as panellists’ companies manage inventories exposure. The Prices Index fell back into ‘decreasing’ territory (and in dramatic fashion) after one month of increasing prices. Manufacturing lead times clearly improved in the month.
The Inventories Index dropped 0.5 percentage points to 45.8% against April’s reading of 46.3%. The New Export Orders Index reading of 50% is 0.2 percentage points higher than April’s figure of 49.8%. The Imports Index remained in contraction territory, registering 47.3%, 2.6 percentage points lower than the 49.9% reported in April.
“New order rates contracted further, as panellists remain concerned about when manufacturing growth will resume,” Fiore continued.
“Panellists’ comments again registered a one-to-one ratio regarding optimism for future growth and continuing near-term demand declines. Supply chains are prepared and eager for growth, as panellists’ comments and the data support reduced lead times for their companies’ more important purchases.
“Price instability remains and future demand is uncertain as companies continue to work down overdue deliveries and backlogs. 76% of manufacturing gross domestic product (GDP) is contracting, up from 73% in April. A larger number of industries contracted strongly, as the proportion of manufacturing GDP registering a composite PMI calculation at or below 45% — a good barometer of overall manufacturing weakness — increasing to 31% in May, compared to 12% in April. May performance was clearly weaker compared to April.”