Home Logon FTA Investment Managers Blog Subscribe About Us Contact Us

Search by Ticker, Keyword or CUSIP       
 
 

Blog Home
   Brian Wesbury
Chief Economist
 
Bio
X •  LinkedIn
   Bob Stein
Deputy Chief Economist
Bio
X •  LinkedIn
 
  The ISM Manufacturing Index Declined to 52.1 in May
Posted Under: Data Watch • ISM
Supporting Image for Blog Post

 

Implications:  Today's ISM report, if taken at face value, shows that growth continues in the manufacturing sector, although at a slower rate.  Eleven of eighteen industries reported growth in May, while trade disputes with China and a tight labor market peppered comments from survey respondents.  Given the prominence of the trade dispute with China in recent weeks, we think negative sentiment helped push down the ISM reading, that being said, manufacturing has definitely slowed from the faster pace of growth seen 2018.  A look at the details of today's report shows that, while growth in production slowed in May, the pace of new orders rose, a positive signal for the months ahead.  Sure, we would prefer to see a rising pace of growth in both two categories, but the May slowdown isn't cause to sound alarm bells.  And remember, the ISM manufacturing index has now shown expansionary readings for 33 consecutive months – that's nearly three straight years of constant growth.  There will be ebbs and flows along the way, that is perfectly normal.   What matters most is that the economic fundamentals remain in place for growth into the future.  On the labor front, the employment index rose to 53.7 from 52.4 in April.  And growth would be faster, but companies continue to report difficulty in sourcing qualified labor as well as retaining existing employees.  Adding today's reading to the myriad of other data on the employment market, we are currently forecasting manufacturing job growth of around 4,000 in May (which would match the gain reported in April).  If this forecast holds true, that would put manufacturing employment growth at a healthy 187,000 jobs in the past year.  Finally, on the inflation front, the prices paid index rose to 53.2 in May, led by electronic components and dairy products.  The pouting pundits will almost certainly cling to today's report as a sign of the economic weakness they have been forecasting for months (and for many, years).  From our reading - pairing today's data with other readings on the economy - there is no sign of a "looming recession."  We expect the manufacturing sector (and the economy) to continue higher in the months ahead. In other news this morning, construction spending was flat in April, but up 1.2% including revisions to prior months.  A rise in government work on highways and streets was offset by declines in private projects for manufacturing and commercial buildings. 

Click here for PDF version

Posted on Monday, June 3, 2019 @ 12:28 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.
Search Posts
 PREVIOUS POSTS
The Plow Horse Returns?
Personal Income Rose 0.5% in April
Real GDP Growth in Q1 was Revised to a 3.1% Annual Rate
Foreign Slowness Not an Obstacle
M2 and C&I Loan Growth
New Orders for Durable Goods Declined 2.1% in April
New Single-Family Home Sales Declined 6.9% in April
Existing Home Sales Declined 0.4% in April
Don't Count on a Rate Cut
M2 and C&I Loan Growth
Archive
Skip Navigation Links.
Expand 20242024
Expand 20232023
Expand 20222022
Expand 20212021
Expand 20202020
Expand 20192019
Expand 20182018
Expand 20172017
Expand 20162016
Expand 20152015
Expand 20142014
Expand 20132013
Expand 20122012
Expand 20112011
Expand 20102010

Search by Topic
Skip Navigation Links.

 
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.