US manufacturing industry stabilizes after plunging to financial-crisis lows, ISM survey reveals
- The US manufacturing industry ended a four-month decline and began to stabilize in May, the Institute for Supply Management's latest survey showed Monday.
- The ISM's purchasing managers' index ticked higher to 43.1 last month from 41.5, remaining in contraction territory but climbing off an 11-year low.
- Six manufacturing sectors grew through the month, while 11 shrank, according to ISM.
- "May appears to be a transition month," Timothy Fiore, chair of the ISM Business Survey Committee, said, adding "demand remains uncertain."
The Institute for Supply Management's US manufacturing survey ticked slightly higher in May, ending a four-month decline that placed the industry at its lowest levels since the financial crisis.
The organization's purchasing managers' index gained to 43.1 last month from 41.5, still deep in contraction territory but stabilizing off of its 11-year low. The index of new orders jumped to 31.8 from 27.1, and ISM's production metric leaped to 33.2 from 27.5.
ISM's inventories metric posted the only return to growth out of 10 total subgroups. The index climbed to 50.4 from 49.7. Any readings below 50 indicate the segment is shrinking, while readings above 50 represent growth.
A separate IHS Markit PMI released Monday showed a similar swing higher while remaining below the key contraction threshold
"May appears to be a transition month, as many panelists and their suppliers returned to work late in the month. However, demand remains uncertain, likely impacting inventories, customer inventories, employment, imports and backlog of orders," Timothy Fiore, chair of the ISM Business Survey Committee, said in the Monday report.
Six industries reported growth through May, while 11 industries contracted.
ISM's latest report shows where the economy is beginning to heal after months of plunging activity, weakened demand, and nationwide stay-at-home orders. While economists expect the brunt of the coronavirus pandemic's fallout to arrive in the second quarter, the latest manufacturing reports suggest the industry has weathered the storm and is on its way back to growth.
"The May data still were pretty weak, but the relative improvement during the month is broadly consistent with the idea that the easing of restrictions in many areas has helped activity at least somewhat," Daniel Silver, executive director at JPMorgan, said in a note.