US manufacturing sector shrinks further in May: Institute for Supply Management

By Mucahithan Avcioglu

ISTANBUL (AA) - The downturn in the economic activity in the US manufacturing sector accelerated in May, according to a report Monday by the Institute for Supply Management (ISM).

The ISM manufacturing purchasing managers' index (PMI) fell to 48.5%, down 0.2 percentage points from April. A reading above 50 indicates growth, while below that level shows contraction.

The expectation for the index was 49.3% for last month.

"Economic activity in the manufacturing sector contracted in May for the third consecutive month, following a two-month expansion preceded by 26 straight months of contraction," an ISM statement said.

"In May, US manufacturing activity slipped further into contraction after expanding only marginally in February. Contraction in most of the indexes that measure demand and output have slowed, while inputs have started to weaken," said Susan Spence, chair of ISM.

Demand indicators showed mixed results, with the Customers' Inventories and New Export Orders indices decreasing more sharply than the New Orders and Backlog of Orders indexes.

In May, industrial output continued to decline, despite the Production Index rising from a concerningly low value the month before. This suggests that panelists' enterprises are still reducing their production plans in the face of economic uncertainty.

Imports, pricing, stocks, and supplier deliveries are all considered input indexes. As anticipated, after increasing as businesses finished pull-forward work before tariffs, the Inventories Index entered contraction territory, according to the statement.

Meanwhile, the Supplier Deliveries Index showed continued weak performance, suggesting persistent delays in clearing products via ports of entry. The Imports Index shrank sharply, falling 7.2 percentage points from April, as tariff-driven price rise moderated somewhat.

On the other hand, S&P Global's PMI for the US rose to 52 points in May from 50.2 in the previous month.

The S&P Global figure was still below the market forecasts of 52.3 points for last month.