Economic activity in the manufacturing sector expanded in May for the 10th consecutive month, and the overall economy grew for the 13th consecutive month, according to the nation's supply executives in the latest Manufacturing ISM Report On Business released today.
The PMI in May registered 59.7 percent, a decrease of 0.7 percentage point when compared to April's reading of 60.4 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.
A PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 13th consecutive month in the overall economy, as well as expansion in the manufacturing sector for the 10th consecutive month.
Norbert Ore, chair of the Institute for Supply Management Manufacturing Business Survey Committee said, "The past relationship between the PMI and the overall economy indicates that the average PMI for January through May (58.9 percent) corresponds to a 5.7 percent increase in real gross domestic product (GDP). In addition, if the PMI for May (59.7 percent) is annualized, it corresponds to a 6 percent increase in real GDP annually."
ISM's New Orders Index registered 65.7 percent in May, which is the same rate of growth reported for the preceding month. This is the 11th consecutive month of growth in the New Orders Index. A New Orders Index above 50.2 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).
The 15 industries reporting growth in new orders in May are: Wood Products; Electrical Equipment, Appliances & Components; Plastics & Rubber Products; Fabricated Metal Products; Miscellaneous Manufacturing; Paper Products; Primary Metals; Furniture & Related Products; Transportation Equipment; Computer & Electronic Products; Printing & Related Support Activities; Chemical Products; Nonmetallic Mineral Products; Machinery; and Food, Beverage & Tobacco Products. The only industry reporting a decrease in new orders in May is Petroleum & Coal Products.