Bulletin
Investor Alert

London Markets Open in:

Economic Report Archives | Email alerts

June 1, 2020, 11:06 a.m. EDT

Manufacturers show faint signs of revival in May as economy slowly reopens, ISM finds

ISM manufacturing index climbs to 43.1% in May from 41.5%

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    Dow Jones Industrial Average (DJIA)
  • X
    S&P 500 Index (SPX)

or Cancel Already have a watchlist? Log In

By Jeffry Bartash, MarketWatch


Getty Images
An employee at D'Addario & Company works on manufacturing face shields in New York. D'Addario.

The numbers: American manufacturers are still struggling mightily from coronavirus-related shutdowns and the damage to global trade, but they showed faint signs of revival in May as most states loosened restrictions and people began returning to work, a survey of executives found.

The Institute for Supply Management said its manufacturing index climbed to 43.1% last month from an 11-year low of 41.5% in April, suggesting the worst of the economic damage from the pandemic might be over.

Economists surveyed by MarketWatch had forecast the index to total 44%. Readings under 50% indicate more companies are shrinking instead of expanding.

Still, manufacturers and the economy more broadly have a long way to go to return anything close to normal. Gross domestic product could contract in the second quarter by as much as 40%, some forecasters say, and a recovery is widely expected to take at least a few years.

What happened: The ISM’s indexes for new orders, production and employment all rose, but from exceedingly low levels that show the economy is still shrinking at the sharpest pace in a decade.

The index for new orders, for example, rose 4.7 points in May to 31.8%, but that is just half as high as it was two years ago.

Twelve of the 18 industries tracked by ISM shrank in May. The few industries that are expanding make groceries, paper products such as toilet paper and minerals used in health-care goods.

The ISM index is compiled from a survey of executives who order raw materials and other supplies for their companies. The gauge tends to rise or fall in tandem with the health of the economy.

See: MarketWatch Economic Calendar

Big picture: The slight pickup in manufacturing is yet another sign an economic recovery is under way, but progress is likely to be slow and halting, especially if viral infections pick up again. The uncertainty is expected to linger and hinder a full-blown recovery.

What they are saying? “Still very weak, but with some hope for improvement,” said chief economist Scott Brown of Raymond James.

Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +2.13% and S&P 500 /zigman2/quotes/210599714/realtime SPX +1.34% were bouncing around in early Monday trade and were showing slight gains at last check. Unrest in the U.S. and trade tensions with China put downward pressure on stocks.

/zigman2/quotes/210598065/realtime
US : Dow Jones Global
26,642.59
+556.79 +2.13%
Volume: 407.34M
July 14, 2020 5:13p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,197.52
+42.30 +1.34%
Volume: 2.63B
July 14, 2020 5:13p
loading...

Jeffry Bartash is a reporter for MarketWatch in Washington.

This Story has 0 Comments
Be the first to comment
More News In
Economy & Politics

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.