By Geoffrey Smith
Investing.com -- A closely watched gauge of U.S. manufacturing activity picked up in May, surprisingly, suggesting that the momentum in the U.S. economic recovery remains strong going into the summer.
The Institute of Supply Management's manufacturing purchasing managers index rose to 56.1 from 55.4 in April, defying expectations for a slight drop to 54.5.
A reading above 50 is typically consistent with economic expansion. The ISM's PMI has been in a downward trend since April 2021, when the rebound dynamic from the pandemic was at its strongest, but its readings have stayed well above 50 since then.
“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment," the ISM chair Timothy Fiore said in a statement. He noted that while the employment sub-index actually fell below 50, "companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain."
All of the six biggest manufacturing industries — machinery, computers & electronics, food and drink, transportation equipment, petroleum and coal products, and chemicals — registered moderate-to-strong growth in the month.
"Sentiment remained strongly optimistic regarding demand, with five positive growth comments for every cautious comment," Fiore said, adding that companies still see "supply chain and pricing issues as their biggest concerns."
The PMI's new orders subindex improved to 55.1 from 53.5, and there were also tentative signs of progress with input price pressures, as the prices sub-index eased from 84.6 to 82.2.