Manufacturing remains sluggish in May
NEW YORK (AP) - June 2, 2008
The reading of 49.6 for the overall index from the Institute for
Supply Management was up from 48.6 percent in April. It beat
economists' expectations of 47.9, according to the consensus
estimate of Wall Street economists surveyed by Thomson
Financial/IFR, but it was still below a reading of 50, signaling
contraction.
The manufacturing sector has failed to grow for the last four
months, as the index has hovered near its lowest level in five
years.
"Manufacturers find themselves caught between rising costs and
weakening demand in many industries," Norbert J. Ore, chairman of
ISM's manufacturing business survey committee, said in a statement
accompanying the report. "Exports continue strong due to the weak
dollar - without the weak dollar the story would be much more
negative in manufacturing."
John Silvia, chief economist at Wachovia Corp., said, "It's
exports, and, of course, government spending, that's keeping us
above water."
Stocks fell in morning trading after the Commerce Department
reported data showing construction spending dipped in April for the
sixth time in seven months. The ouster of Wachovia Corp.'s chief
executive also weighed on shares.
The Dow Jones industrial average fell 151.20, or 1.2 percent, to
12,487.12. The Standard & Poor's 500 fell 14.59, or 1.04 percent,
to 1,385.79 and the Nasdaq composite fell 28.35, or 1.12 percent,
to 2,494.31.
The ISM said on Monday that its index of prices rose to its
highest since April 2004. Prices climbed for all commodities except
zinc and methanol, a building block for chemical products from
construction materials to windshield washer fluid.
In another troubling sign, order backlogs, an indication of
future work, fell 5.5 percentage points lower than April.
Recent economic data has been anemic, but not terrible, however.
That has prompted some economists to say the nation may avoid a
long and deep recession.
Monday's manufacturing data is "not a number that gives you a
clear signal that things are going to improve dramatically, but
given the overall report, it gives you some optimism," said Oscar
Gonzalez, an economist, John Hancock Financial Service. "At least
by this report, the economy is not heading into a severe
recession."