Summary:
ISM manufacturing PMI largely stable at 54.9 (up from 54.8 in April)
New orders rise to 59.5, while employment index rises to 53.5
ISM manufacturing prices slips to 60.5 from 68.5 in April
PMI data suggests that wage pressures are increasing
ADP private payrolls add 235k jobs in May
The US Institute of Supply Management (ISM) released the monthly Purchase managers index (PMI) for the month of May yesterday. Data showed that the factory activity in the US remained stable.
The ISM’s manufacturing PMI rose to 54.9 in May. This was a 0.1-point move from April’s 54.8 and came just close to the forecasts of 55.0. The PMI reading above 50 signals expansion in the manufacturing sector.
Data from the ISM’s PMI showed that hiring picked up the pace during May. This was consistent with the Fed’s Beige Book report that was released earlier this week. The Fed’s report showed that hiring increased along with wages as well in some regions.
The ISM’s new orders index rose 2 points from 57.5 in April to 59.5 in May, while the employment index rose to 53.5 during the reported month. Employment in the manufacturing sector was seen rising for the fifth consecutive month in May.
ISM’s Timothy Fiore said that the increased production and the pace of hiring were making it difficult for manufacturers to find qualified workers.
Fiore said that this could potentially see a ripple effect with wages and production capacity. There were also indications that growth in the manufacturing sector could continue to rise in the coming months.
However, Fiore said that the outlook was not without risks. The paper and furniture sectors were hit by the policy uncertainty with the Trump administration plans for a 20% tariff on imports of Canadian softwood lumber.
In a separate report, Markit’s manufacturing PMI showed the activity rose to 52.7 in May, beating estimates of 52.5 which was the same level as in April. However, Markit called the increase, the weakest pace of expansion since September last year. Markit’s manufacturing PMI rose to a 22-month high in January this year.
Read more: https://www.orbex.com/blog/2017/06/ism-manufacturing-data-adp-payrolls-hint-strong-nfp-numbers/