Economy: ISM Manufacturing Index for May 2020

Earlier today, the Institute for Supply Management® (ISM®) released their Manufacturing Purchasing Manager's Index (PMI®) for May 2020:

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Predicted: 43.0%

Actual: 43.1% (+1.6 points month-on-month change)

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Previous month: 41.5%

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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 contracted in May, and the overall economy returned to expansion after one month of contraction, 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:

“Despite the COVID-19 issues, we are seeing an increase of quoting activity. This has not turned into orders yet, but it is a positive sign.”
(Computer + Electronic Products)

“Current conditions in the automotive, construction, oil and gas, agriculture equipment, and tube/pipe markets are all adversely impacting our business results.”
(Chemical Products)

“We see an issue with suppliers that are affecting production. At the same time, social distancing measures in [the] manufacturing plant and customer demand are impacting the rate of production.”
(Transportation Equipment)

"Increased COVID-19 sales in the food business has really stressed our production capabilities.”
(Food, Beverage + Tobacco Products)

“Fuel sales demand are beginning to rebound in May as stay-at-home orders are lifted across the country.”
(Petroleum + Coal Products)

“Returning to full production for automotive, ramp-up will still depend on speed of automotive start-ups. We have built up inventory to stock. Ready to ship.”
(Fabricated Metal Products)

“Business activity remains strong for consumable applications and very weak in durable segments.”
(Plastics + Rubber Products)

“We have been fortunate that most of our customer base is considered to be a part of the critical workforce, so we have been running at around 80 percent of our normal production volume.”
(Primary Metals)

“Getting out from under several suppliers being closed worldwide. Also, looking at what really needs to be in China.” (Machinery)

“We see a lot of positive signs, despite what's going on. People seem to continue to be building and looking to projects for fall of 2020 and beyond. There is good optimism out there.”
(Nonmetallic Mineral Products)

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