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US Manufacturing Activity Contracts

U.S. Manufacturing Activity Contracts Further in May. Activity among U.S. manufacturers contracted again in May, and at a sharper rate, suggesting that the economy remains fragile. The Institute for Supply Management (ISM) reported Monday that its purchasing managers’ index (PMI) of manufacturing activity dipped to 48.7 from 49.2 in April. A reading below 50 indicates contraction, and economists polled by The Wall Street Journal had expected the index to tick up, marking a slower rate of contraction.

The survey’s measure of new orders slumped, hinting at weakening demand for factory-made goods. Production also weakened, although it remained in expansion territory. The overall index had returned to growth in March, ending a 16-month streak of weakening activity, but that rebound has proven short-lived.

“Demand remains elusive as companies demonstrate an unwillingness to invest due to current monetary policy and other conditions,” said Timothy Fiore, chairman of the ISM manufacturing business survey committee. This hesitancy to invest reflects broader economic uncertainties and ongoing challenges within the manufacturing sector.

The price index, meanwhile, continued to expand, albeit at a slower rate, indicating that inflation remains a stubborn concern for U.S. manufacturers. This persistent inflationary pressure suggests that costs are still rising, complicating the economic landscape for businesses and policymakers alike. U.S. Manufacturing Activity Contracts Further in May.

In summary, the latest ISM report highlights ongoing challenges in the U.S. manufacturing sector, with declining new orders and production levels pointing to a fragile economic environment. Despite a brief period of growth, the sector’s contraction underscores the broader economic uncertainties and inflationary pressures that continue to impact manufacturers.

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