U.S. manufacturing sector expands faster in May amid continued supply constraints

WASHINGTON, June 1 (Xinhua) -- The U.S. manufacturing sector saw faster growth in May amid continued supply chain bottlenecks, the Institute for Supply Management (ISM) reported Wednesday.

The Purchasing Managers' Index (PMI) stood at 56.1 percent, up 0.7 percentage points from the April reading. Any reading above 50 percent indicates the manufacturing sector is generally expanding.

"The ISM manufacturing report for May offers a mixed read on the state of U.S. industry," Tim Quinlan and Shannon Seery, economists at Wells Fargo Securities, wrote in an analysis.

"Orders and order backlogs are growing at a faster pace. Meanwhile, supplier deliveries are getting better but only incrementally, and inflation pressure is fading but not materially," the two economists noted.

The New Orders Index reading of 55.1 percent is 1.6 percentage points higher than that recorded in April, according to the ISM report. The Backlog of Orders Index registered 58.7 percent, 2.7 percentage points higher than the April reading.

The Supplier Deliveries Index reading of 65.7 percent is 1.5 percentage points lower than the April figure, indicating slightly faster deliveries and easing supply chain congestion.

The Prices Index registered 82.2 percent, down 2.4 percentage points compared to the April figure, the ISM report showed.

"Price increases haven't let up. I thought 2022 was going to be better, but it hasn't been. Shortages (among other issues) are still disrupting the supply chain," said a business executive from the plastics & rubber products industry.

The Employment Index, meanwhile, went into contraction territory at 49.6 percent, 1.3 percentage points lower than that recorded in April. Quinlan and Seery noted that despite a sub-50 print for the employment component, businesses are having less trouble finding help.

"Despite the Employment Index contracting in May, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain," said Timothy Fiore, chair of the ISM's manufacturing business survey committee.

The U.S. manufacturing sector, however, "remains in a demand-driven, supply chain-constrained environment," said Fiore.

A business executive in the computer & electronic products industry said suppliers are seeing "a light at the end of the tunnel" for restoration of semiconductor component supply, noting that second-quarter and third-quarter supply "appears to be loosening."