Manufacturing Continues To Expand

June 1, 2007
ISM index at highest level in past year

For the fourth consecutive month, economic activity in the manufacturing sector expanded, according to the Manufacturing ISM Report On Business. "Manufacturing expanded in May as the PMI rose to its highest level in the last 12 months. Both the New Orders and Production Indexes indicated growth, continuing a trend that is now in its fourth month. The ISM Inventories Index indicates that manufacturers are now in their 10th month of inventory reduction. A major concern of respondents is the rate of price increases covering a wide variety of commodities," explained Norbert J. Ore, C.P.M., chair of the Institute for Supply Management.

Manufacturing growth accelerated in May as the PMI registered 55%, an increase of 0.3 percentage point when compared to April's reading of 54.7%.

A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

"Today's ISM report is consistent with other recent data showing a mid-year rebound in manufacturing," said Thomas J. Duesterberg, CEO of the Manufacturers Alliance/MAPI. "Growth is being spurred by strength in high technology goods, mining and material handling equipment, aerospace products, and capital goods for new plants. Additionally, exports to rapidly expanding markets around the world are helping U.S. production."

"Inventory rebuilding should help economic growth in the second half of 2007," he added. "While still increasing, prices for commodity inputs such as metals and energy are moderating.

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