Economic activity in the U.S. manufacturing sector contracted in May for the first time since November 2012, and the overall economy grew for the 48th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business, issued June 3 by the Institute for Supply Management. The report is based on data compiled from U.S. manufacturing purchasing and supply executives nationwide, including purchasing, new orders, production, employment, and price indices.

The ISM PMI (purchasing managers index) registered 49 percent, a decrease of 1.7 percentage points from April's reading of 50.7 percent, indicating contraction in manufacturing for the first time since November 2012 and only the second time since July 2009. This month's PMI reading is at its lowest level since June 2009, when it registered 45.8 percent.

The New Orders Index decreased in May by 3.5 percentage points to 48.8 percent, and the Production Index decreased by 4.9 percentage points to 48.6 percent. The Employment Index registered 50.1 percent, a slight decrease of 0.1 percentage points compared to April's reading of 50.2 percent. The Prices Index registered 49.5 percent, decreasing 0.5 percentage point from April, indicating that overall raw materials prices decreased from last month.

Several comments from the panel of supply executives surveyed indicate a flattening or softening in demand due to a sluggish economy, both domestically and globally, said Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management Manufacturing Business Survey Committee, in a prepared statement.

Of the 18 manufacturing industries, 10 are reporting growth in May in the following order: Printing & Related Support Activities; Nonmetallic Mineral Products; Fabricated Metal Products; Wood Products; Furniture & Related Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Machinery; and Paper Products.

The six industries reporting contraction in May—listed in order—are: Miscellaneous Manufacturing; Transportation Equipment; Chemical Products; Plastics & Rubber Products; Computer & Electronic Products; and Primary Metals.

The next Manufacturing ISM Report On Business featuring June 2013 data will be released July 1.

ISM Report
Source: Institute of Supply Management