US factory activity surprises to the upside in May, ISM survey shows

Manufacturing activity in the States defied expectations for a slight slowdown in May, the results of perhaps the most closely-followed survey for the sector showed.

The Institute for Supply Management's factory sector Purchasing managers' Index rose from April's level of 55.4 to 56.1 (consensus: 55.0), reflecting a quicker pace of growth.

Survey responses indicated that supply-chain issues remained widespread, but suppliers in the Computer and Electronic Products space were reportedly seeing a "light at the end of the tunnel" as regards semiconductor component supply.

For his part, the chair of the survey committee, Timothy Fiore, said that "the U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment."

However, he went on to add: "Despite the Employment Index contracting in May, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain, according to Business Survey Committee respondents' comments."

A key sub-index tracking new orders improved from 53.5 to 55.1, as did others for companies' order backlogs and new export orders.

The sub-index linked to the prices charged by companies meanwhile dipped from 84.6 to 82.2 and that for employment from 50.9 to 49.6.

The speed of supplier deliveries also improved as shown by a decline in the corresponding sub-index from 67.2 to 65.7.

Customers' inventories shrank at a brisker pace than in April with the sub-index for those falling from 37.1 to 32.7.

Companies' own levels of stockpiles however grew at a faster pace with the sub-index rising from 51.6 to 55.9.

All six of the largest US manufacturing industries recorded "moderate-to-strong" growth in May.

Those were: Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; Petroleum & Coal Products; and Chemical Products.