Economic activity in the manufacturing sector declined in May for the tenth consecutive month while the overall economy failed to improve after registering a slight increase in the first quarter according to the latest figures from the Manufacturing NAPM Report on Business. The May PMI fell to 42.3%, below the consensus figure of 44.0, and under the breakeven point of 42.7. The Index stands at a level consistent with a recession in the overall economy.
According to Norbert J. Ore, C.P.M., chair of the National Association of Purchasing Management's Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "The manufacturing sector continued to decelerate, and at a faster rate, in May. While the sector continues to struggle, it is encouraging that pricing pressures appear to be moderating and inventory liquidation has accelerated relieving concerns about inflationary pressures. May appears to be a continuation of the soft start for the second quarter that we saw in April. However, there is no evidence of recovery in this month's report as the key indicators continue to decelerate at a faster pace."
The production indices all fell in May. The continuing decline in the inventories index indicates a successful correction is underway in the manufacturing sector. With both New Orders and Backlog of Orders still below 50%, there is no indication of a quick improvement in manufacturing activity, however. New Orders failed to grow in May, ending two consecutive months of improvement. Backlog of Orders was unchanged, failing to grow for the thirteenth consecutive month in May. The Production Index fell slightly by 0.2% to 42.7 percent. This is the sixth consecutive month, and eighth in the last ten months, that the index has been below the 50% mark.
Among other sub-indexes, New Export Orders declined from 47.3% in April to 45.6% in May. Only three of the twenty sub-industries in manufacturing reported growth: industrial and commercial equipment and computers; food; and wood and wood products.
| Series | May | April |
| PMI | 42.1 | 43.2 |
| Production | 42.7 | 42.9 |
| New Orders | 45.5 | 45.9 |
| Backlog of Orders | 40.0 | 43.5 |
| Supplier Deliveries | 45.7 | 47.4 |
| Inventories | 38.7 | 39.6 |
| Employment | 35.0 | 38.1 |
| Prices Paid | 45.2 | 48.9 |
| New Export Orders | 45.6 | 47.3 |
| Imports | 46.6 | 47.2 |
The next NAPM Report on Business will be released on July 2, 2001.
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