U.S. Manufacturing Pulls Out Of Dive In May, Survey Shows

By Agence France-Presse U.S. manufacturers pulled out of a dive in May, showing tentative signs of recovery from the Iraq war, a closely watched survey showed June 2. The Institute for Supply Management (ISM) purchasing managers' index, based on a survey of supply executives, rose to a higher-than-anticipated 49.4 points in May from 45.4 points in April. It was the third consecutive reading below 50 points, which indicates an industry contraction. But the pace of the slide in activity clearly slowed in May. "The manufacturing sector failed to grow in May for the third consecutive month," survey chief Norbert Ore said. But orders, backlogs and production were expanding, and prices increased at a slower pace. "These are all signs of encouragement that manufacturing is recovering from the decline due to the war," Ore said. "Supply managers' comments seem to be split among those who are starting to see improvement, those who see no improvement in sight and those who are uncertain as to the direction," he added. "This is not really unusual when the economy is at a crossroads." New orders grew, reversing two months of declines. The new orders index climbed to 51.9 points from 45.2 in April. The backlog of orders grew, ending 10 months of declines. The backlog index rose to 51 from 47.5. Output expanded, with the production index rising to 51.5 points from 47. "Today's ISM report indicates that the double-dip recession in manufacturing may be close to an end," said Manufacturers Alliance/MAPI chief economist Daniel Meckstroth. "Forward looking components of the ISM report -- orders and backlogs -- were growing in May and the report shows an increase in the May production index." He forecast an improvement in the manufacturing sector of the economy in the second half of this year. The survey also showed manufacturers paid higher prices in May, but that the pace of a recent surge in costs had eased. The prices index fell to 51.5 points from 63.5 in April. Copyright Agence France-Presse, 2003