ISM's PMI Dips on Trade Concerns

Manufacturing in May grew at its slowest pace in two and a half years amid trade tensions and slower demand, reports the Institute for Supply Management. The PMI for the Manufacturing ISM Report on Business decreased 0.7 percentage points from April to a reading of 52.1 percent. The index for new orders gained one percentage point, while production decreased by one point.

“Comments from the panel reflect continued expanding business strength, but at soft levels consistent with the early-2016 expansion,” said Timothy R. Fiore, chairman of the ISM Manufacturing Business Survey Committee. “Demand expansion continued, with the New Orders Index strengthening, but remaining in the low 50s, the Customers’ Inventories Index remaining at a ‘too low’ level, and the Backlog of Orders Index contracting for the first time since January 2017. Consumption (production and employment) continued to expand, resulting in a combined PMI contribution of 0.3 percentage point. Inputs — expressed as supplier deliveries, inventories and imports — were lower this month, primarily due to inventory softening and suppliers continuing to deliver faster, resulting in a combined 4.6 percentage point reduction in the Supplier Deliveries and Inventories indexes. Imports contracted for the second straight month. Overall, inputs reflect supply chains’ ability to respond faster and indicate that supply managers are closely watching inventories. Prices remain at a relatively stable level.”