ISM: Manufacturing expands for 4th month

TEMPE, Ariz. – U.S. manufacturing last month expanded for the fourth consecutive month, while the nation’s economy grew for the 67th straight month, according to a report today from the Institute for Supply Management.
Its national Purchasing Managers Index rose in May to 55.0 points – its highest level in 13 months – from April’s 54.7 points. (Readings higher than 50 indicate manufacturing is expanding; readings of 42 or higher indicate expansion in the overall economy.) Analysts surveyed by Bloomberg News had expected the PMI to decline to 54 points.
“The ISM Inventories Index indicates that manufacturers are now in their 10th month of inventory reduction,” wrote Norbert J. Ore, chair of the ISM Manufacturing Business Survey Committee. But, he said, “A major concern of respondents is the rate of price increases [for] a wide variety of commodities.”
The ISM’s index of prices paid fell to 71 points in May from 73 in April. Analysts had expected the gauge to hold steady in May.
“The manufacturing side of the economy is certainly heating back up,” Mark Vitner, senior economist at Wachovia Corp. in Charlotte, N.C., told Bloomberg News. The improvement in the PMI “reflects a resurgence in capital spending, and this will give us stronger economic growth in the second half of the year,” he said.
The Institute for Supply Management, the publisher of Inside Supply Management magazine, produces monthly Reports on Business for the manufacturing and non-manufacturing sectors. Additional information is available at www.ism.ws.