The PMI Composite Index registered 49 percent for May 2013, according to the Institute for Supply Management. Ten of the 18 manufacturing industries saw growth in May.
The current rate is 1.7 percentage points below April’s index of 50.7. This puts it below the separating line of 50, signifying a contracting manufacturing sector for the first time since November, when it slipped to 49.9. Prior to November, the index had remained in the expansion area since August 2009. The 12-month average ranging from June 2012 through May 2013 fell 0.3 percentage points from the month prior to 51.1.
“The latest manufacturing reading certainly was disappointing. Given the mixed signals, a deceleration of the economy in the second quarter is now more certain, and the Fed slowing the pace of its monthly $85 billion bond buying program less likely,” said JOC economist Mario Moreno.
The ISM new orders index fell steeply this month to 48.8, the lowest new orders index since July 2012 when it stood at 47.5. This index monitors new orders being placed by businesses and gives early indication of the level of future manufacturing activity. Month-to-month it was down 3.5 percentage points. The 12-month average fell seven-tenths of a percentage point to 51.2. New orders had expanded in the previous four months.
The ISM employment index inched down one-tenth of a percentage point to 50.1 in May, the closest it’s been to contraction since November 2012. It hasn’t fallen below the line of 50 since September 2009. The employment index’s 12-month average fell 0.4 percentage points to 53 in April.
The inventories index of the ISM rose this month, up 2.5 percentage points from last month’s index of 46.5 to May’s index of 49. This is the third straight month of contraction. Its 12-month average increased two-tenths of a percentage point to 48.5.