Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       

Blog Home
   Brian Wesbury
Chief Economist
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
X •  LinkedIn
  The ISM Manufacturing Index Rose to 61.2 in May
Posted Under: Data Watch • Inflation • ISM
Supporting Image for Blog Post

Implications:  The manufacturing sector continued to expand rapidly in May, growing slightly faster than the rapid pace in April.  Gains were broad-based, with sixteen of eighteen industries reporting growth. Although a measure of current output (the production index) notched its second consecutive decline and now sits under 60 for the first time in eleven months, future output looks healthy with the new orders index jumping to 67.0 and new export orders notching a gain as well. Respondent comments were generally positive but tempered by widespread worries about disrupted supply chains, rapidly rising costs for inputs, shortages of raw materials across the board, and employers having trouble filling open positions. These issues have all come together to keep production from rising quickly enough to meet the explosion of demand as the US economy reopens. The result has been increasing delays in supplier deliveries, with the index for that measure rising to the highest level since the late 1970s.  We can also see supply-chain issues in other parts of the report: the customers' inventories index is at the lowest reading on record while the backlog of orders index (which show orders rising faster than production can fill them) at the highest reading on record.  The good news is that manufacturing activity should remain robust for the foreseeable future to clear this order backlog.  However, the ongoing the race to get the needed inputs to fill these orders has caused elevated readings for the prices paid index, which remains near the highest levels since 2008.  Overall, seventeen of eighteen industries reported increased prices for raw materials in May.  Only one commodity (acetone) was reported as lower in price while fifty-three were reported up.  Inflation looks likely to remain a key topic in 2021, with the M2 money supply up 18.0% over the last twelve months at the same time supply chains struggle to catch up to demand. Finally, the employment index moved lower for a second consecutive month in May, falling to 50.9, as difficulty finding qualified workers and ongoing absenteeism issues remained headwinds.  In other news this morning, construction spending rose 0.2% in April (+0.7% including revisions to prior months), below the consensus expected gain of 0.5%.  The gain in April was largely due to a big increase in home building, which more than offset declines in public safety, transportation, and power projects.

Click here for a PDF version
Posted on Tuesday, June 1, 2021 @ 2:34 PM • Post Link Print this post Printer Friendly

These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
The information presented is not intended to constitute an investment recommendation for, or advice to, any specific person. By providing this information, First Trust is not undertaking to give advice in any fiduciary capacity within the meaning of ERISA, the Internal Revenue Code or any other regulatory framework. Financial professionals are responsible for evaluating investment risks independently and for exercising independent judgment in determining whether investments are appropriate for their clients.
Follow First Trust:  
First Trust Portfolios L.P.  Member SIPC and FINRA. (Form CRS)   •  First Trust Advisors L.P. (Form CRS)
Home |  Important Legal Information |  Privacy Policy |  California Privacy Policy |  Business Continuity Plan |  FINRA BrokerCheck
Copyright © 2024 All rights reserved.