US manufacturing grows again in May
US dollar falls against major currencies, providing factories some relief.
WASHINGTON — American factories expanded for the third straight month in May, helped by a weaker US dollar.
The Institute for Supply Management said June 1 that its manufacturing index rose to 51.3 last month from 50.8 in April.
Anything above 50 signals growth.
The index was stuck below 50 from October through February as American factories struggled with economic weakness abroad and a strong dollar that made US products more expensive in foreign markets. The dollar has fallen against other major currencies since the end of January, giving factories some relief.
“Manufacturing has stabilized,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, wrote in a research note. “The weaker dollar this year has already made a material difference to exporters.”
In China, two surveys released June 1 showed that factory activity remains feeble, worrying global investors. An official index from the Chinese Federation of Logistics & Purchasing came in at 50.1, unchanged from April.
Separately, the private Caixin/Markit survey was more pessimistic, with activity falling to 49.2 in May from 49.4 the previous month. Total new business fell for the first time in three months while new export orders declined for the sixth straight month, Caixin said.
The Chinese reports suggest that Beijing has little to show for its recent efforts to stimulate the world’s second-biggest economy, which has been decelerating since 2010.
In the US, the ISM reported that manufacturers’ new orders and production grew more slowly in May. Export orders and a measure of employment were unchanged. The index was pulled up by an increase in deliveries from suppliers. Overall, 12 of 18 manufacturing industries reported growth last month, led by wood products manufacturers and textile mills.
The ISM, a trade group of purchasing managers, surveys about 200 U.S. companies each month.
American manufacturing has been sending out mixed signals recently.
The Commerce Department reported last week that orders to U.S. factories for long-lasting manufactured goods rose 3.4 per cent in April, the most since January. But the details of the durable goods report weren’t as positive. Most of the April strength came from the volatile commercial aircraft category, and a measure that tracks business investment fell for the third straight month.
The US economy got off to a rough start this year, growing at a lacklustre 0.8% annual pace from January through March.
Manufacturers’ troubles weighed on growth. But economists expect the growth rate to rise to perhaps 2.5% in the second quarter as a robust American job market gives consumers the incomes and confidence to spend more. Employers have added a healthy 2.7 million jobs over the past year.
© 2016 The Associated Press