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Saturday, September 26, 2020
HomeNewsEconomyISM Manufacturing Index (PMI) Beats Forecast in May, Suggests Economy Growing Again

ISM Manufacturing Index (PMI) Beats Forecast in May, Suggests Economy Growing Again

Manufacturing Export Wooden Crate, reading Made in USA. 3D Illustration for ISM Manufacturing Index (PMI). (Photo: AdobeStock)

PMI Indicates Overall Economy Returned to Expansion After One Month of Contraction

Manufacturing Export Wooden Crate, reading Made in USA. 3D Illustration for ISM Manufacturing Index (PMI). (Photo: AdobeStock)
Manufacturing Export Wooden Crate, reading Made in USA. 3D Illustration for ISM Manufacturing Index (PMI). (Photo: AdobeStock)

Tempe, Arizona (PPD) — The Institute for Supply Management (ISM) Manufacturing Index (PMI) came in at 43.1% in May, up from 49.1% in April and beating the consensus forecast. This reading indicates expansion after one month of contraction that ended 131 consecutive months of growth.

Forecasts for the PMI ranged from a low of 40.0 to a high of 46.1, and the consensus forecast was 42.7.

“The coronavirus pandemic impacted all manufacturing sectors for the third straight month,” Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee, said. “May appears to be a transition month, as many panelists and their suppliers returned to work late in the month.”

“However, demand remains uncertain, likely impacting inventories, customer inventories, employment, imports and backlog of orders.”

Of the 18 manufacturing industries, the six that reported growth in May — in the following order — are: Nonmetallic Mineral Products; Furniture & Related Products; Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Paper Products; and Wood Products.

The New Orders Index rose 4.7 to 31.8%, while the Production Index rose 5.7 to 33.2%. Remaining index readings can be viewed in the table below. But overall, the readings indicate manufacturing is still in contraction but the U.S. economy overall is growing again.

The 11 industries reporting contraction in May, in order, are: Printing & Related Support Activities; Primary Metals; Transportation Equipment; Petroleum & Coal Products; Fabricated Metal Products; Machinery; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Chemical Products; Computer & Electronic Products; and Plastics & Rubber Products.

IndexMayAprilDirectionRate of ∆Trend* (Months)
PMI43.141.5+1.6ContractingSlower3
New Orders31.827.1+4.7ContractingSlower4
Production33.227.5+5.7ContractingSlower3
Employment32.127.5+4.6ContractingSlower10
Supplier Deliveries68.076.0-8.0SlowingSlower7
Inventories50.449.7+0.7GrowingFrom Contracting1
Customers’ Inventories46.248.8-2.6Too LowFaster44
Prices40.835.3+5.5DecreasingSlower4
Backlog of Orders38.237.8+0.4ContractingSlower3
New Export Orders39.535.3+4.2ContractingSlower3
Imports41.342.7-1.4ContractingFaster4
OVERALL ECONOMYGrowingFrom Contracting1
Manufacturing SectorContractingSlower3
Manufacturing ISM Report On Business data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.

Written by
Staff Writing Group

PPD Business, the economy-reporting arm of People's Pundit Daily, is "making sense of current events." We are a no-holds barred, news reporting pundit of, by, and for the people.

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