In May, the US manufacturing ISM showed its fifth consecutive improvement. The headline index rose from 40.1 to 42.8, slightly above the consensus estimate (42.3). Looking at the details, new orders (51.1 from 47.2) climbed above the boom/bust level, for the first time since November 2007. Also production (46.0 from 40.4), backlog of orders (48.0 from 40.5), supplier deliveries (49.8 from 44.9) and new export orders (48.0 from 44.0) rose significantly, while imports (42.5 from 42.0) increased more moderately. Producers became somewhat more negative about inventories with both inventories (32.9 from 33.6) and customer inventories (46.0 from 49.5) deteriorating. Employment stayed broadly unchanged (34.3 from 34.4), while prices paid rose sharply (43.5 from 32.0). The growth in new orders is an encouraging sign as the sub-index is considered as a leading indicator, but both inventories and employment remain close to the record lows.
Other: UK manufacturing PMI surprises on the upside
In the UK, manufacturing PMI surprised again on the upside of expectations in May. UK manufacturing PMI rose from an upwardly revised 43.1 to 45.4, while the consensus was looking for an outcome of 44.0. The index is now at its highest level since June 2008 and significantly above the low (34.5) reached in November last year. This outcome confirms that the worst for the UK economy might be behind us.
