May ISM Manufacturing:
53.2% 55.4%, Down UP From 54.9%, Misses Expectations of 55.5% (Updates: ISM Corrections, April Construction Spending Per Census Bureau Up Only 0.2%)
The Census Bureau’s weak construction report hasn’t changed (yet).
Economic activity in the manufacturing sector expanded in May for the 12th consecutive month, and the overall economy grew for the 60th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.
… The May PMI® registered 53.2 percent, a decrease of 1.7 percentage points from April’s reading of 54.9 percent, indicating expansion in manufacturing for the 12th consecutive month. The New Orders Index registered 53.3 percent, a decrease of 1.8 percentage points from the 55.1 percent reading in April, indicating growth in new orders for the 12th consecutive month. The Production Index registered 55.2 percent, 0.5 percentage point below the April reading of 55.7 percent. Employment grew for the 11th consecutive month, registering 51.9 percent, a decrease of 2.8 percentage points below April’s reading of 54.7 percent. Comments from the panel reflect generally steady growth, but note some areas of concern regarding raw materials pricing and supply tightness and shortages.
Of the 18 manufacturing industries, 17 are reporting growth in May …
Business Insider had an expectation of 55.5%.
All three key GDP drivers were in expansion mode: Production and New Orders as seen above, and Backlog (at 52.5%). But all three dropped.
Given that April was supposed to be the first month of getting back on a normal footing after the oh-my-god-awful-terrible winter, it was reasonable to have expected an increase in May’s PMI. It didn’t happen. With the usual caution that this is a sentiment survey and not a hard-numbers report, that still doesn’t bode well for the optimists’ predictions of 4 percent annualized growth for the second quarter.
UPDATE: Zero Hedge — “The weather bounce is over … The actual print was below the lowest Wall Street estimate.”
UPDATE 2, 11:05 p.m.: Speaking of weather bounces, April didn’t have one in construction spending, which was up only 0.2 percent on a seasonally adjusted basis from March, and didn’t grow at all in the private sector.
The raw numbers show that the overall March-April increase was 8.6 percent. The private sector was up by 7.0 percent, while the public sector was up by 12.9 percent. The respective raw increases last April, following a relatively mild winter, were 8.5% overall, 7.8% private and 10.4% public. This year’s raw April vs. March differentials, based the weather excuse which was flogged ad nauseam, should have been far greater. But they weren’t.