2017.05.2311:41:00UTC+00U.s. Manufacturing Sector Business Conditions Improve at Slower Rate in May

The latest IHS Markit flash manufacturing PMI data for the U.S. showed that the nation’s manufacturing sector business conditions rebounded at the slowest rate since September 2016. The seasonally adjusted headline figure dropped slightly to 52.5 in May from April’s 52.8. This indicates towards the most subdued upturn in overall business conditions for eight months. The lower reading was mainly due to subdued rates of output, new order and employment growth in May.

Volumes of production have risen in every month since June 2016; however, the pace of growth alleviated further from the peak witnessed at the beginning of this year. Certain manufacturers implied that domestic clients had adopted a wait-and-watch approach to investment spending. In the meantime, new export sales rose just marginally in May that indicated a sustained drag from weak external demand.

Additional cautious inventory policies were recorded throughout the manufacturing sector, with stocks of purchases dropping at the most notable rate since September 2016. This was achieved via an additional deceleration in growth of input buying in May.

In the meantime, job creation eased since April and stayed just modest. The latest survey emphasised a sharp deceleration in input price inflation from the 31-month peak seen in April. Furthermore, the latest rise in input costs was the least notable since November 2016. Weaker cost pressures led to the subdued rise in factory gar prices for three months in May.