US factory activity still shrinking rapidly in May, ISM says

The Institute for Supply Management's factory sector Purchasing Managers' Index rose from a reading of 41.5 for April to 43.1 in May, falling shy of the reading of 43.5 expected by most economists.

Subindices for output and prices rebounded the most, from 27.5 to 32.1 and from 35.3 to 40.8, respectively.

Perhaps the most important gauge in the survey also improved, from 27.1 to 31.8, but remained mired deep in contractionary territory.

A reading below 50.0 on any of the indices denotes contraction and at a quickening pace as they fall further below it.

However, many of the purchasing managers canvassed reported some signs of improvement.

Among the chief exceptions, one manager from the Transportation Equipment sector said that social distancing measures at the manufacturing plant and customer demand were impacting production.

Another from the chemicals space told ISM: "current conditions in the automotive, construction, oil and gas, agriculture equipment, and tube/pipe markets are all adversely impacting our business results."

"Less terrible, but still terrible nonetheless. [...]," said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

"With six of the eight regular monthly regional surveys strengthening in May, a modest pick-up in the national ISM was always likely. But the index remains extremely depressed, consistent with rapid declines in output, investment and employment."