U.S. manufacturers grew at a slower pace in May, as production levels fell slightly.
The Institute for Supply Management, an association of purchasing managers, says that its manufacturing index slipped to 52.1 last month, down from 52.8 in April. Anything above 50 signals an expansion in manufacturing. The sector has been reporting growth for 33 months.
In emailed commentary, CIBC economist Katherine Judge said the index’s fall was against consensus for a slight uptick. The production sub-index fell to its lowest level since August 2016, she said, though a pickup in the new orders index helped offset that weakness. Still, new orders were well below late 2017 highs, which suggests “there likely won’t be a surge in manufacturing production ahead,” she said.
Judge also noted that private non-residential spending was “a weak spot in the report, adding to other soft indicators of business investment received lately.”
She concluded that, overall, the data weren’t a big market mover, given that trade issues remain unresolved.
Multiple companies surveyed for the index said that import taxes imposed by President Donald Trump on China were a concern.
One chemical company surveyed said they would shift business from China to Mexico. But that move could be complicated by Trump announcing last week that he would apply tariffs to Mexican imports to force that country to stop immigrants and drugs from crossing the southern border with the United States.