The ISM® (Institute for Supply Management®) Manufacturing PMI® reported in at 48.7% for May, as business activity shrank for the second consecutive month, down 0.5 percentage point from the previous month. Manufacturing activity remained sluggish; of the six largest manufacturing industries, only Fabricated Metal Products and Chemical Products recorded growth in May. The forward-looking new orders sub-index decreased 3.7 percentage points to 45.4%, the lowest reading since May 2023. The Prices Index which measures what companies pay for raw materials and other supplies, dropped 3.9 percentage points to 57.0%. The Employment Index increased by 2.5 percentage points to 51.1% and follows seven months of contraction. The Backlog of Orders Index declined 3.0 percentage points to 42.4% and has now contracted for the twentieth consecutive month.
The ISM® (Institute for Supply Management®) Services PMI® reported in at 53.8% for May, 4.4 percentage points higher than the previous month. May’s reading is the highest since August ’23. The Business Activity Index surged 10.3 percentage points to 61.2%. This marks 48 consecutive months of growth and is the highest reading since November ’22. The New Orders Index increased to 54.1%, up 1.9 percentage points, showing expansion for the 17th consecutive month. For the 84th consecutive month, services businesses had to pay higher prices for goods and services, as the Prices Index decreased 1.1 percentage points to 58.1%. Employment activity contracted for the fifth time in six months, as the Employment Index registered 47.1% up 1.2 percentage points from April. The Backlog of Orders Index declined 0.3 percentage point to 50.8%, marking the second consecutive month in expansion territory.
The U.S. Bureau of Labor Statistics reported 272,000 jobs were added as the unemployment rate ticked up by 0.1 percentage point to 4.0% in May. The number of unemployed was up slightly to 6.6M. A year earlier, the unemployment rate was 3.7%, and the number of unemployed was 6.1M. Job gains occurred in health care (+68,000), government (+43,000), leisure & hospitality (+42,000), and professional, scientific, & technical services (+32,000). Among the unemployed, the number of permanent job losers was little changed (+8,000) at a seasonally adjusted 1.764M, and the number of reentrants to the labor force increased (+117,000) to 2.046M. The labor force participation slipped to 62.5% from 62.7% in April. Average hourly earnings grew 0.4%. At $34.91 average hourly earnings are up 4.1% from a year ago.
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