- Prior was 50.2
- New export orders fell at a sharp pace that was the quickest in three years
- Input prices decreased at a modest pace midway through the second quarter, with firms recording a notable turnaround from the sharp uptick in costs seen in April
Chris Williamson, Chief Business Economist at S&P
Global Market Intelligence, said:
“May saw a renewed deterioration of business conditions in the
US manufacturing economy which will add to concerns about
broader economic health and recession risks.
“Although a record improvement in supplier delivery
performance helped manufacturers fulfill back orders in May,
generating a third successive monthly rise in output, the overall
rate of production growth remained disappointingly meagre
thanks to a further drop in new order inflows.
“Unless demand picks up, production growth will move into
decline seen as it is clearly unsustainable to rely solely on
backlogs of orders, which are now being depleted at the
fastest rate for three years. Hence companies are cutting back
sharply on their input buying and seeking to minimise inventory,
tightening their belts for tough times ahead.
“All of this is of course disinflationary, with manufacturers and
their supply chains having seen pricing power shift rapidly from
the seller to the buyer over the course of the past year, resulting
in a dramatic cooling of industrial price pressures.
“We are likely to see further downward pressure on both
output and prices for goods in the coming months, thanks to
the demand environment which has been hit by higher interest
rates, the increased cost of living, economic uncertainty and a
post-pandemic shift in spend from goods to services.
“The one area of resilience is the labour market, as firms
continued to take on more staff to fill long-empty vacancies,
though we should bear in mind that employment is typically a
lagging indicator. It does nevertheless point to some upward
pressure on wages.”
The ISM survey is out at the top of the hour.
The US dollar is at the lows of the session.