United States: Manufacturing decelerates markedly in May
June 2, 2011
The ISM manufacturing index (PMI) dropped from 60.4% in April to 53.5% in May, surprising the market on the downside, as analysts expected the index to drop more moderately to 57.1%. The subdued reading saw the index hit its lowest level since September 2009 amid disruptions to the supply chain associated with Japanese disaster along with high energy prices. Nevertheless, the figure remains above the 50 point threshold, which indicates that the manufacturing sector is expanding. The moderation observed in May was broad-based, with all sub-indices dropping over the previous month. That said, the deceleration was particularly severe in the stock of new orders, which dropped 10.7 percentage points, as well as in the backlog of orders, which fell 10.5 percentage points but remained in expansionary mode. On the other hand, inventories were seen to contract.