May survey data signalled only a marginal improvement in the health of the U.S. manufacturing sector.
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The headline PMI fell to its lowest level since September 2009 as output growth eased and new orders fell for the first time since August 2009.
Weak demand conditions and ongoing trade tensions led firms to express the joint-lowest degree of confidence regarding future output growth since data on the outlook were first collected in mid-2012.
At the same time, employment rose at the slowest rate since March 2017 and backlogs of work were unchanged.
Meanwhile, inflationary pressures eased further, with both input costs and output prices increasing at softer rates.
The seasonally adjusted IHS Markit final U.S. Manufacturing Purchasing Managers’ Index (PMI) posted 50.5 in May, down from 52.6 in April.
The latest headline figure signalled only a slight improvement in operating conditions, with the latest reading the lowest since September 2009.
The data for the second quarter so far have indicated a distinct slowdown in the manufacturing sector compared to the first three months of 2019.
A key factor weighing on the headline reading was the softest expansion of output since June 2016.
May data signalled only a marginal rise in production that was often linked to clearing backlogs of previously-placed orders.
At the same time, manufacturers signalled the first decline in new orders since August 2009.
Though only fractional, survey respondents stated that weak client demand drove the fall.
Some firms also noted that customers were postponing orders due to growing uncertainty about the outlook.
Similarly, new business from abroad contracted for the first time since July 2018, albeit at a marginal rate.
Consequently, manufacturers exhibited a lower degree of confidence towards output over the coming year.
Expectations for growth dipped to their joint-lowest since the series began in July 2012, as firms highlighted concerns surrounding ongoing trade tensions and a growing trend of customers postponing new orders, especially among large clients.
On the price front, cost burdens increased at only a modest rate in May.
The rise was the slowest since July 2017, with reports of tariffs driving costs higher being countered by increased competition among suppliers.
Subsequently, firms increased their factory gate charges only marginally amid efforts to remain competitive.
Meanwhile, firms signalled a further increase in employment in May.
The upturn was commonly linked to the replacement of voluntary leavers and retirees.
Nonetheless, the expansion was the slowest since March 2017 amid tight labour market conditions.
Finally, purchasing activity was broadly unchanged in May as firms indicated greater efforts to use current inventories for production and increased efforts to readjust stock levels in light of softer demand conditions. ■