U.S. ISM manufacturing accelerates expansion in May

On Monday, June 1, the Institute for Supply Management (ISM) released data showing that the U.S. manufacturing purchasing managers index rose to 61.2 in May from 60.7 in the previous month, which was also higher than the previous market expectations of 60.9. In addition, according to ISM statistics, the manufacturing PMI in May has been the 12th consecutive month in the expansion range.

Among the data, the new orders sub-index rose to the highest level in the last 17 years, the order backlog hit a record high, price input is still high, and the employment index is weak.

In terms of specific sub-indices.

New orders index recorded 67%, up 2.7 percentage points from 64.3% in April.
The production index recorded 58.5%, down 4 percentage points from April’s 62.5%.
The employment index recorded 50.9%, down 4.2 percentage points from 55.1% in April
The supplier delivery index was 78.8%, up 3.8 percentage points from 75% in April
The backlog of orders index was 70.6%, up 2.4 percentage points from April’s 68.2%.

It is worth noting that the employment index among the above sub-indices has fallen to 50.9 in March after soaring to 59.6, a high since March 2018, which is the second consecutive month of decline.

The ISM said in a press release this month that the six major branches all showed “moderate to strong” growth in May, in the following order: computer and electronic products, metal products, food, beverages, and food and beverage products. In order: computer and electronic products, metal products, food, beverage and tobacco products, chemical products, transportation equipment, petroleum and coal products.

Timothy R. Fiore, chairman of the association’s manufacturing committee, said in the release of the report that the manufacturing sector performed well for the 12th consecutive month, with strong growth in demand, consumption and inputs compared to April. However, he also said.

Some respondents said that their companies and suppliers, despite their best efforts, are still struggling to meet the growing demand for reasons related to difficulties in hiring. The issue of manufacturing recovery has now transitioned from addressing sluggish demand to labor issues across the value chain.

Compared with the April report, Fiore focused on labor issues in this report, which is also one of the Fed’s current indicators of concern. James Bullard, president of the St. Louis Fed, who did not have the right to vote on interest rates this year, said in an interview with the Financial Times that the current recovery in the U.S. job market is faster than expected, and although the number of non-farm payrolls is still 8 million lower than the level before the outbreak, other indicators are much closer to the normal level. He called on the Fed to consider other indicators that measure the job market, particularly the ratio of the number of unemployed to the number of job openings. However, he also said that although the U.S. economy is booming and gross domestic product is growing at a rapid pace, it is uncertain whether employment will grow with it, and the single-month increase in employment is not expected to reach 1 million in the coming period.

After the release of the data U.S. stocks overall fluctuations, the three major indices were mixed, including the Dow opened had risen nearly 270 points, and then dip by level, the data release still maintained a range oscillation trend, stronger performance than the S&P and Nasdaq. At press time, the Dow was up 0.25%, the S&P was down 0.05% and the Nasdaq was down 0.51%. 10-year U.S. bond yields were up 4 basis points intra-day at 1.634%.

Among the precious metals, spot gold weakened significantly after the data release, falling below the $1,900 mark.