07182018Wed
Last updateWed, 18 Jul 2018 2pm

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ISM: Manufacturing Expanded at Faster Pace in May

According to the Institute for Supply Management (ISM), manufacturing expanded in May as the PMI registered 58.7%, an increase of 1.4% from the April reading of 57.3%. The May PMI indicates growth for the 109th consecutive month in the overall economy and the 21st straight month of growth in the manufacturing sector.

ISM’s Backlog of Orders Index registered 63.5% in May, which is 1.5% higher than the 62% reported in April, indicating growth in order backlogs for the 16th consecutive month. 


Mid-America Economy Index Soars to 14 Year High

The May Creighton University Mid-America Business Conditions Index jumped to its highest level in 14 years pointing to strong growth for the next three to six months. The index, which ranges between 0 and 100, expanded to a robust 67.3 from April’s 64.5. This is the 18th straight month the index has remained above growth neutral 50.0, and is the highest reading in 14 years, pointing to strong growth for the region over the next three to six months.

Looking ahead six months, economic optimism, as captured by the May Business Confidence Index, decreased to a still strong 66.3 from April’s 70.2. 

U.S. Added 223,000 Jobs in May

Total nonfarm payroll employment increased by 223,000 in May, and the unemployment rate edged down to 3.8%, the U.S. Department of Labor reported today. Employment continued to trend up in several industries, including retail trade, health care and construction.

Manufacturing employment continued to expand over the month (+18,000). Durable goods accounted for most of the change, including an increase of 6,000 jobs in machinery. Manufacturing employment has risen by 259,000 over the year, with about three-fourths of the growth in durable goods. 

Fed Beige Book Cites Strong Manufacturing Activity

Economic activity expanded moderately in late April and early May with few shifts in the pattern of growth, according to the Federal Reserve’s monthly Beige Book report. The Dallas District was an exception, where overall economic activity sped up to a solid pace. Manufacturing shifted into higher gear with more than half of the Districts reporting a pickup in industrial activity and a third of the Districts classifying activity as "strong." The major concern manufacturers expressed was trade policy. Some worried about the effects of tariffs on their costs. 

Texas Manufacturing Outlook Reaches 12-Year High

Texas factory activity rose markedly in May, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, increased 10 points to a 12-year high of 35.2, signaling further acceleration in output growth. Perceptions of broader business conditions were even more positive in May than in April.

Most other indexes of manufacturing activity also indicated a sharp acceleration in May. The capacity utilization index rose notably from 18.7 to 32.2, and the shipments index jumped 20 points to 39.5. Demand growth picked up as the growth rate of orders index increased eight points to 26.5. All three measures reached their highest readings since 2006. Meanwhile, the new orders index held steady at 27.7. 

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