Manufacturing activity stumbled across the country last month, coming in well below expectations. Specifically, just moments ago, the Institute for Supply Management, the Tempe, Arizona-based trade group, reported that manufacturing had contracted in May, falling below the 50.0 line, which separates an expanding manufacturing sector from one that is declining.
Specifically, this metric came in at 49.0 for last month. That was notably below the April reading of 50.7 and expectations for May of 51.0. This was the first time since last November, when this metric had fallen to 49.9, that this series had registered a score that was below 50.0. In fact, this survey had been above 50.0 for every month last year save the aforementioned slight dip in November.
Moreover, for the first four months of 2013, the series had registered scores of 53.1, 54.2, 51.3, and 50.7, respectively. Thus, this latest report was something of a shocker, especially since last Friday, the purchasing managers had noted a sharp step-up in activity at the manufacturing level in the greater Chicago area.
Meanwhile, of the 18 areas covered by this report on the nation's purchasing managers, 10 noted increases in activity, led by printing and related support activities. Six industries saw a contraction in activity in May headed by miscellaneous manufacturing.
Among the individual categories in this survey, there was a drop in new orders, with that segment declining from 52.3 in April to last month's 48.8. Also falling in May were production, supplier deliveries, inventories, prices, and backlogs. Moreover, employment barely increased in May, easing its rate of growth slightly to a score of 50.1.
As to commentary, it was noted that customers are holding back orders in plastics and rubber products, but that there was a slight firming in the textile area. These latter comments aside, this was a troubling report and coincides with other data showing that the nation's expansion seems to be slowing once again as we move more deeply into the second quarter.
At the time of this article's writing, the author did not have positions in any of the companies mentioned.