Haver Analytics
Haver Analytics
| Jun 01 2023

U.S. ISM Manufacturing Index Slips in May

  • Index remains above March low.
  • Orders decline offsets improvement in employment & production.
  • Price index decline reverses earlier strength.

The U.S. ISM manufacturing index eased to 46.9 during May from 47.1 in April, according to the Institute for Supply Management. The index stood below the break-even level of 50 for the seventh straight month and it remained under the peak of 63.8 in March 2021. The Action Economics Forecast Survey expected an index level of 46.8 in May.

Movement amongst the component series was mixed last month. The employment index rose to 51.4 from 50.2, placing it above the break-even level of 50 for a second month and at the highest level in nine months. The figure peaked at 56.9 in March 2021. A reduced 17.0% (NSA) of respondents reported more employment and a higher 15.8% reported less. The production measure surged to 51.1 from 48.9 in April. It was the highest level since October, above its February low of 47.3, as 17.0% reported higher production and 15.8% reported less.

Offsetting these increases, the new orders index declined to 42.6 in May from 45.7 and remained below the level of 54.9 twelve months earlier. It was the ninth consecutive month below the break-even level of 50. A lessened 16.3% (NSA) of respondents reported higher new orders last month while an increased 29.7% reported a decline. The inventories series fell to 45.8 from 46.3. It was down significantly from 57.0 in November of 2021. Just 13.5% of respondents added to inventories while 22.7% lowered inventory levels. The supplier deliveries index slipped to 43.5 from 44.6. It suggests the quickest product delivery speeds since March 2009.

The prices index declined to 44.2 (NSA) in May after increasing to 53.2 in April. It remained above its low of 39.4 last December but well below the high of 92.1 in June of 2021. A lessened 15.4% (NSA) of respondents reported higher prices while an increased 27.1% reported price declines.

In other ISM series, the new export orders index rose to the break-even level of 50.0 in May from 49.8 in April. It remained down from the recent high of 57.1 in February 2022. The imports index fell to 47.3 from 49.9 in April. It has been trending down from the high of 61.0 in June 2021. The order backlog index fell to 37.5 from 43.1 in April. It indicated falling backlog levels for the eighth consecutive month.

The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver's AS1REPNA database.

  • Prior to joining Haver Analytics in 2000, Mr. Moeller worked as the Economist at Chancellor Capital Management from 1985 to 1999. There, he developed comprehensive economic forecasts and interpreted economic data for equity and fixed income portfolio managers. Also at Chancellor, Mr. Moeller worked as an equity analyst and was responsible for researching and rating companies in the economically sensitive automobile and housing industries for investment in Chancellor’s equity portfolio.   Prior to joining Chancellor, Mr. Moeller was an Economist at Citibank from 1979 to 1984.   He also analyzed pricing behavior in the metals industry for the Council on Wage and Price Stability in Washington, D.C.   In 1999, Mr. Moeller received the award for most accurate forecast from the Forecasters' Club of New York. From 1990 to 1992 he was President of the New York Association for Business Economists.   Mr. Moeller earned an M.B.A. in Finance from Fordham University, where he graduated in 1987. He holds a Bachelor of Arts in Economics from George Washington University.

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