Us manufacturing growth accelerated in May as order growth was stronger, highlighting continued robust demand.
The index of business activity rose to 61.2 in May from 60.7 in the previous month, roughly in line with expectations, according to data released by the Institute of supply Management ((ISM)) on Tuesday.The report also shows that input prices are still high and the backlog of orders is at a record high.
The index of new orders rose and was slightly below its 17-year high, with the longest delivery time since 1974.Indicating that manufacturers continue to face the plight of supply shortages and transportation delays.
The ISM report also showed that output grew at its slowest pace in nearly a year in May, further evidence that continuing supply and transport challenges have prevented factories from using full capacity.
One disappointing aspect of the report is the employment indicator. The ISM employment index fell to 50.9 from 55.1, indicating that supply chain disruptions have led to weaker demand for factory labor.
Manufacturing employment growth showed a similar moderation in May in manufacturing surveys recently released by the Philadelphia Fed, the Kansas City Fed and the New York Fed. That could affect the monthly non-farm payrolls report to be released on Friday, which is expected to increase by about 650000 last month.
Delivery times were further extended in May, with the ISM delivery index rising to 78.8, the highest level since April 1974.
The index of paid prices for raw materials has fallen from its highest level since mid-2008.