Unexpected: Manufacturing Shrinks in May
Manufacturing surprisingly contracted in May, according to a new survey released Monday. The Institute of Supply Managements released its latest monthly survey of business, finding the manufacturing index, PMI, shrunk to 49, down from April's 50.7. Anything under 50 indicates that manufacturing is contracting. Economists had expected manufacturing to expand in May.
The index is at its lowest level since June 2009. The biggest pull-backs were in measures of new orders, back-log of orders and production, which signals increasing weakness in the months ahead. The index found that the overall economy was still growing slightly, but that growth was slowing.
With the recent run-up in the stock market, the media have pumped up the economy, suggesting that the economic recovery was gathering steam. May's measurement of manufacturing, however, indicates the opposite is true.