1st Jun 2023 15:31
(Alliance News) - The US manufacturing sector declined in May, according to the latest data from S&P Global and the Institute for Supply Management on Thursday.
The seasonally adjusted S&P Global US manufacturing purchasing managers' index posted 48.4 in May, up from 50.2 in April and broadly in-line with the earlier flash estimate of 48.5.
The reading was the fastest deterioration in operating conditions since February, S&P Global said, after the index broke the 50.0 no-change mark for the first time in six months in April.
S&P Global said the decline was driven by a fall in new orders during the period, often due to sufficient inventory levels or reduced demand due to price hikes.
"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," said Chris Williamson, chief business economist at S&P Global Market Intelligence.
"Although a record improvement in supplier delivery performance helped manufacturers fulfil 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," Williamson said.
Separately on Thursday, the Institute for Supply Management said that the US manufacturing sector contracted for the seventh month running in May.
The ISM manufacturing PMI registered 46.9% in May, down from 47.1% in April. The reading was worse than the market expectations of 47%, according to FXStreet.
Timothy Fiore, chair of the ISM, said: "The US manufacturing sector shrank again, with the manufacturing PMI losing a bit of ground compared to the previous month, indicating a faster rate of contraction. The May composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period. However, there is clearly more business uncertainty in May."
By Harvey Dorset, Alliance News reporter
Comments and questions to [email protected]
Copyright 2023 Alliance News Ltd. All Rights Reserved.