US: Modest improvement in May ISM manufacturing numbers – Nomura

The analysis team at Nomura points out that the US ISM manufacturing survey showed a modest improvement in May as the top-line index increased to 54.9 from 54.8 in April.

Key Quotes

“The new orders index increased 2.0pp to 59.5, implying continuing momentum in the sector. The production index fell slightly to 57.1 from 58.6, but a high reading suggests continued improvement in activity. The employment index increased 1.5pp to 53.5, pointing to healthy hiring activity. The inventories index increased 0.5pp to 51.5, indicating a faster pace of expansion in inventory levels at factories.”

“Although recent data on inventories suggest manufacturers remain cautious after a period of correction, the rise in the inventories index suggests they are still willing to increase inventory investment. The prices paid index decreased 8.0pp to 60.5. This reading is still well above the break-even point of 50 and marks the 15th consecutive month of growth albeit at a much slower pace. Some of the easing in May may reflect some stabilization in prices of certain commodities. Survey respondents reported falling prices of copper, nickel, methanol, and butadiene. However, the reports of the prices of steel were mixed depending on product and region.”