Economists at ING explain that the key manufacturing survey suggests strong order books will keep output robust with employment picking up nicely.
"The US ISM manufacturing index for May has barely changed from April’s reading – rising to 54.9 from 54.8. The consensus had expected it to hold steady. Production slipped marginally to stand at 57.1 versus 58.6 previously, but new orders rose to 59.5 from 57.5 so it looks as though the pipeline for output remains very strong given both readings are well above the break-even 50 level. The employment component moved higher to 53.5 from 52.0, which offers encouragement for the jobs story as well. As such, the manufacturing sector is clearly a source of strength right now and the report boosts the case for a Fed rate hike at the June 14 FOMC meeting."