ISM Manufacturing data contracts in May. | CountingPips Forex & Currency Trading Blog

June 2, 2008 - Forex Economic News

ISM Manufacturing data contracts in May.

U.S. Manufacturing data, released today by the Institute for Supply Management, showed that manufacturing activity failed to grow in May for the fourth straight month. May's ISM Report On Business index readings for economic activity were at 49.6 percent, an increase over April's 48.6 percent and better than economic forecasts which expected a 48.5 percent reading. A score above 50 is considered to be growth and less than 50 is considered to be contraction in that sector. The report showed that the overall economy grew for the 79th straight month despite the manufacturing contraction.

Norbert J. Ore, chair of the ISM Business Survey Committee, stated in the report that, "The manufacturing sector failed to grow in May as the PMI fell below 50 percent for the fourth consecutive month. In relative terms, May was down slightly from April as the rate of contraction in manufacturing slowed. The Production Index was a bright spot as it moved above 50 percent after declining for two months. Manufacturers find themselves caught between rising costs and weakening demand in many industries. Exports continue strong due to the weak dollar — without the weak dollar the story would be much more negative in manufacturing."

New orders, production and employment showed increased readings for May while supplier deliveries and inventories showed declines for the month. Exports, getting a boost from a low U.S. dollar, increased for May and are growing faster according to the report as exports have shown growth for 66 straight months. Prices also grew for May and have also been growing faster for 17 straight months.

Busy news week.

This week is a busy news week when it comes to economic releases. There are four interest rate announcements this week with the Reserve Bank of Australia on Tuesday, the Reserve Bank of New Zealand on Wednesday and both the Bank of England and the European Central Bank announcing rate decisions on Thursday. Economic forecasts are predicting that all four central banks will leave their rates as is for the time being. Also, capping off this busy week is employment numbers out of North America on Friday with Canada releasing its Net Change in Employment numbers and the U.S. releasing its Change in Nonfarm Payrolls numbers.

Tags: ism manufacturing, us economy, report on business, news, economic releases

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