New orders accelerate in May, production slows


Economic activity in the manufacturing sector expanded in May for the 34th consecutive month, and the overall economy grew for the 36th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business released Friday, June 1.

Manufacturing continued its growth in May as the PMI registered 53.5 percent, a decrease of 1.3 percentage points when compared to April’s reading of 54.8 percent. A reading above 50 percent indicates that the manufacturing economy generally is expanding; below 50 percent indicates that it generally is contracting. A PMI in excess of 42.6 percent, over a period of time, generally indicates an expansion of the overall economy.

ISM’s New Orders Index registered 60.1 percent in May, which is an increase of 1.9 percentage points when compared to the April reading of 58.2 percent and also the highest level recorded by the index since April 2011, representing a continuation of growth for the 37th consecutive month and at a faster rate than in April. A New Orders Index above 52.3 percent, over time, generally is consistent with an increase in the Census Bureau’s series on manufacturing orders.

ISM’s Production Index registered 55.6 percent in May, which is a decrease of 5.4 percentage points when compared to the 61 percent reported in April but still indicating growth for the 36th consecutive month. An index above 51.2 percent, over time, generally is consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

“Comments from the panel generally reflect stable-to-strong orders, with sales showing steady improvement over the first five months of 2012,” said Bradley Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee.

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