The US ISM Manufacturing PMI unexpectedly jumped to 56.1 last month from 55.4 in April and topped analysts’ estimates of 54.5. Faster increases were seen for:
- new orders (55.1 vs 53.5 - highest reading in three months),
- production (54.2 vs 53.6)
- inventories (55.9 vs 51.6)
Price pressures eased for a second month (82.2 vs 84.6), however still remain at near extreme highs. On the flip side, employment contracted (49.6 vs 50.9, which is the biggest fall in employment since November of 2020). Nevertheless companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain, while business sentiment remained strongly optimistic regarding demand but supply chain and pricing issues remain the biggest concerns, according to Institute for Supply Management. "The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment," said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee.
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US ISM Manufacturing surprised on the upside, while the S&P Global US Manufacturing PMI was revised lower to 57 in May from a preliminary of 57.5, pointing to the slowest growth in factory activity since January. Also new orders in both readings vary significantly - ISM showed solid increase, while PMI report revealed that new orders are slowing. Additionally ISM reading is in contradiction with several regional Fed surveys from New York Texas, Richmond and Philadelphia which all recently showed a solid decline of manufacturing activity. Source: Bloomberg via ZeroHedge
Recent reports warn of stagflation as the rising interest rates, ongoing supply-chain disruptions, labor shortages and consumers' shift in spending patterns toward services may hurt the rate of growth of the manufacturing sector, while price pressures remain elevated.
