Economy: ISM Manufacturing Index for May 2018

Earlier today, the Institute for Supply Management® (ISM®) released their Manufacturing Purchasing Manager's Index (PMI®) for May 2018:

Predicted: 58.5%
Actual: 58.7%

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Previous month: 57.3%

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Every month, the ISM surveys purchasing and supply executives at hundreds of companies across the country who are involved in manufacturing in some form. The resulting index is watched closely by academics, economists and investors because manufacturing accounts for about 12% of U.S. Gross Domestic Product (GDP).

The PMI is a reliable barometer of U.S. manufacturing: A PMI above 50% implies that U.S. manufacturing expanded during the month specified, while a reading below 50% implies that the made-in-the-USA sector contracted.

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From Today's Report:

"...Economic activity in the manufacturing sector expanded in May, and the overall economy grew for the 109th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®..."

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The following is a sampling of quotes from a diverse pool of U.S. manufacturers:

“We are currently overselling our forecast and don’t see an end to the upswing in business. We are very concerned, however, about the tariffs proposed in Section 301 and are focusing on alternatives to Chinese sourcing.”
(Transportation Equipment)

“Very difficult to hire skilled and unskilled labor.”
(Food, Beverage and Tobacco Products)

“We are concerned about the strong dollar affecting our export orders as well as the steel tariffs, which are causing domestic steel prices to rise.”
(Fabricated Metal Products)

“Strong demand from (agricultural) business; solid demand in all other business segments.”
(Chemical Products)

“Sales remain strong. Lead times and direct material costs are soaring.”
(Machinery)

“Suppliers are seeing price increases and trying to pass them on.”
(Miscellaneous Manufacturing)

“Continued talk around steel tariffs has resulted in price increases for domestic line pipe, while HRC seems to be moving sideways. Temporary exemptions for allies and an agreement with South Korea have not calmed the market.”
(Petroleum and Coal Products)

“Growth seems to be coming in the construction industry, but at a slower pace than expected with delays due to weather in the U.S. Business in (Latin America) is way up, and Canada is off to a decent start.”
(Nonmetallic Mineral Products)

“Industry demand is causing price increases. Fuel prices are also on the rise, and there have been (price) increases associated with that.”
(Primary Metals)

“Severe allocation, long lead times and upward price pressure, particularly in the electronic components market, continue to hamper our ability to meet customer demand and our shipping schedule.”
(Computer and Electronic Products)

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