Posted June 1, 2010
Manufacturing expands at slower pace
Economic activity in the manufacturing sector expanded in May for the 10th consecutive month.
According to the lnstitute for Supply Management, the PMI registered 59.7 percent, a decrease of 0.7 percentage point when compared to April's reading of 60.4 percent.
"The rate of growth as indicated by the PMI is driven by continued strength in new orders and production. Employment continues to grow as manufacturers have added to payrolls for six consecutive months," said Norbert J. Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee. "The recovery continues to broaden as 16 of 18 industries report growth. There are a number of reports, particularly in the tech sector, of shortages of components; this is the result of excessive inventory de-stocking during the downturn."
ISM's New Orders Index registered 65.7 percent in May, which is the same rate of growth reported for the preceding month.
"The index is well above the 50 percent growth threshold and at an elevated level similar to what was seen in late 2003 when the manufacturing sector broke out of the 2001 recession," said Daniel J. Meckstroth, chief economist for the Manufacturers Alliance/MAPI. "Very low consumer inventories and strong gains in exports signaled in the ISM report point to key reasons for the strong and quick industrial rebound in this cycle. There is a post-financial crisis global recovery in foreign trade coupled with a large domestic inventory swing which accounts for the very broad-based recovery in manufacturing activity and the upward price pressure in raw materials."
