The U.S. economy continues its growth pattern as May becomes the 24th consecutive month of growth, according to a report released on June 1 by the . Institute of Supply Management.
The May Manufacturing PMI registered 56.1%, an increase of 0.7 percentage point from the reading of 55.4 % in April.
“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment,” said Timothy Fiore, chair of ISM’s manufacturing business survey committee. “Despite the Employment Index contracting in May, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain. Panelists reported slightly lower rates of quits compared to April. May was a second straight month of slight easing of prices expansion, but instability in global energy markets continues. Surcharge increase activity appears to be stabilizing across all industry sectors. Sentiment remained strongly optimistic regarding demand. Panelists continue to note supply chain and pricing issues as their biggest concerns.”
Specific index reports are as follows:
- The New Orders Index reading of 55.1% is 1.6 percentage points higher than the 53.5% recorded in April.
- The Production Index reading of 54.2% is a 0.6-percentage point increase compared to April’s figure of 53.6%.
- The Prices Index registered 82.2%, down 2.4 percentage points compared to the April figure of 84.6%.
- The Backlog of Orders Index registered 58.7%, 2.7 percentage points higher than the April reading of 56%.
- The Employment Index went into contraction territory at 49.6%, 1.3 percentage points lower than the 50.9% recorded in April.
- The Supplier Deliveries Index reading of 65.7% is 1.5 percentage points lower than the April figure of 67.2%.
- The Inventories Index registered 55.9%, 4.3 percentage points higher than the April reading of 51.6%.
- The New Export Orders Index reading of 52.9% is up 0.2 percentage point compared to April’s figure of 52.7%.
- The Imports Index fell into contraction territory, decreasing 2.7 percentage points to 48.7% from 51.4% in April.”
What Respondents are saying:
- Suppliers are seeing a light at the end of the tunnel for restoration of (semiconductor) component supply. Second-quarter and Q3 supply appears to be loosening.” [Computer & Electronic Products]
- “While orders remain strong and backlogs exist, there’s a softening in forecasted orders for leading indicator-type customers and business units.” [Chemical Products]
- “The challenge with semiconductors hasn’t softened; the situation is worsening due to Chinese COVID-19 lockdowns.” [Transportation Equipment]
- “Input costs, particularly grain, oil, dairy and protein, are rising faster than can be passed along at retail and food service, with no relief in sight.” [Food, Beverage & Tobacco Products]
- “Our order books are still strong. Material prices continue to rise, with energy and freight noted as the underlying influences on increased costs.” [Machinery]
- “Shanghai has been shut down since mid-March. All of the (population) is in lockdown, with no production or port activities. Steel remains in allocation. Electronics lead times are more than 12 months.” [Fabricated Metal Products]
- “Supply chain issues are causing us to dramatically extend our lead times. Our production lines have (run) low on or out of parts needed to complete rates every week this month.” [Miscellaneous Manufacturing]
- “We’ve continued to transition to North American sales to avoid ocean vessels, and we are apprehensive about the West Coast ports’ labor contract negotiations. A challenge of doing more business by rail is the backlog of rail cars and embargos.” [Paper Products]
- “Price increases haven’t let up. I thought 2022 was going to be better, but it hasn’t been. Shortages (among other issues) are still disrupting the supply chain.” [Plastics & Rubber Products]
- “Business is steady. We consolidated shifts and do maintenance on off hours, which is working well.” [Primary Metals]
