U.S. manufacturing expanded at a faster pace in May and order backlogs grew by the most in 14 years, even as price gains for materials continued to accelerate, the Institute for Supply Management said on June 1.
Highlights of ISM Manufacturing
-The Factory index rose to 58.7from 57.3.
-The measure of new orders improved to 63.7 from 61.2.
- Order backlogs index increased to 63.5, the highest since April 2004, from 62.
- Employment gauge increased to 56.3, the first gain in three months, from 54.2 reading.
Firmer U.S. consumer spending and solid business investment are driving orders and output, consistent with steady improvement for the nation's manufacturers even as their overseas counterparts contend with moderating economies.
Production picked up with orders, while the increase in unfilled orders prompted factories to step up hiring. The Labor Department's monthly figures earlier showed manufacturers added 18,000 jobs in May, slightly above the average for the past two years. American households and companies are spending steadily, helped in part by lower taxes.
Meanwhile, a gauge of input prices advanced for a sixth straight month, reaching the highest level since April 2011. Tariffs on steel and aluminum are driving up costs and are set to continue disrupting supply chains and prices, a primary concern among U.S. firms.
ISM production measure rose to a three-month high of 61.5 in May from 57.2, while the gauge of prices paid edged up to 79.5 from 79.3.
The measure of export orders fell to 55.6, the lowest since October, from 57.7.
The gauge of supplier deliveries climbed to 62, the second-highest since March 2010, from 61.1; readings above 50 indicate longer delivery times.
The index of customer inventories fell to 39.6 in May, the lowest since December 2010, from 44.3; readings below 50 indicate stockpiles are being depleted.
By Katia Dmitrieva