US May Markit manufacturing PMI falls on decline in production

The United States Flash Markit manufacturing purchasing managers’ index fell once again in May as production declined for the first time since September 2009 amid slower expansion in new orders. New orders expanded at the slowest pace this year as inflationary pressures weighed on producer sentiments.

The US manufacturing sector crept closer to stagnation in May, with the seasonally adjusted Markit Flash US manufacturing PMI registering only slightly above the neutral 50.0 mark at 50.5. This was down from April’s 50.8, signalling only a marginal improvement in overall business conditions that was the weakest since the current upturn started in October 2009.

Softer client demand was highlighted by a further slowdown in new business growth in May. Furthermore, the latest expansion in new order books was the weakest seen in 2016 so far. Data indicated that reduced foreign client demand had underpinned slower growth in overall new orders. New export sales fell for the second month in a row, though the rate of reduction softened since April, Markit report showed.

Lack of pressures on operating capacity, with outstanding work at U.S. manufacturers falling for the fourth successive month in May was shown in the latest Markit survey. Manufacturing firms continued to adopt relatively cautious inventory policies in the face of an uncertain business outlook and weaker new order growth, the report said.

"The weak manufacturing PMI data cast doubt on the ability of the US economy to rebound from its disappointing start to the year in the second quarter," said Chris Williamson, Chief Economist, Markit.

Meanwhile, reports from panelists indicated that greater cost burdens had led some firms to raise their charges in the latest survey period.