Manufacturing Contracts for First Time Since November 2012
Economic activity in the manufacturing sector contracted in May for the first time since November 2012, and the overall economy grew for the 48th consecutive month, according to the nation’s supply executives in the latest Manufacturing ISM Report On Business.
The Purchasing Managers Index (PMI) registered 49%, a decrease of 1.7 percentage points from April’s reading of 50.7%, indicating contraction in manufacturing for the first time since November 2012 and only the second time since July 2009. This month’s PMI reading is at its lowest level since June 2009, when it registered 45.8%.
A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.
The New Orders Index decreased in May by 3.5 percentage points to 48.8%, and the Production Index decreased by 4.9 percentage points to 48.6%. The Employment Index registered 50.1%, a slight decrease of 0.1 percentage point compared to April’s reading of 50.2%.
The Prices Index registered 49.5%, decreasing 0.5 percentage point from April, indicating that overall raw materials prices decreased from last month.
Several comments from the panel indicate a flattening or softening in demand due to a sluggish economy, both domestically and globally.
Of the 18 manufacturing industries, ten are reporting growth in May in the following order: Printing & Related Support Activities; Nonmetallic Mineral Products; Fabricated Metal Products; Wood Products; Furniture & Related Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Machinery; and Paper Products.
The six industries reporting contraction in May listed in order are: Miscellaneous Manufacturing; Transportation Equipment; Chemical Products; Plastics & Rubber Products; Computer & Electronic Products; and Primary Metals.
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