The nation’s manufacturing sector fell to its lowest level in 11 years in May, but other indicators suggest the worst impacts of the COVID-19 pandemic could be over, according to new data from the Institute for Supply Management (ISM).
In its “Report On Business,” the Arizona-based trade group reported the ISM index of U.S. factory activity increased to 43.1 last month, up from 41.5 in April, the lowest level since April 2009. The group said any reading below 50 shows manufacturing is down.
But ISM said there was also good news as the sector showed signs of stabilizing in May, considered a transition month between closed and reopened factories.
The new orders index swelled to 31.8 percent, up 4.7 percentage points from the April reading of 27.1 percent. The production index was at 33.2 percent, a 5.7 percentage point rise compared to April’s 27.5 percent. The backlog of orders index registered 38.2 percent, up 0.4 percent compared to the April reading of 37.8 percent.
“Today’s report on the manufacturing sector represents good news that hints the economy is turning the corner as the states reopened in May,” Chris Rupkey, chief economist at the New York office of Mitsubishi UFJ Financial Group Inc., a Japanese and financial services company, told Reuters. “It will not be a quick recovery for sure, but at least the worst is over.”
Not all the signs posted a recovery.
The employment index was up by 4.6 percentage points to 32.1 percent, from the April reading of 27.5 percent. The supplier deliveries index registered 68 percent, down from the April figure of 76 percent, or 8 percentage points.
“The coronavirus pandemic impacted all manufacturing sectors for the third straight month,” said Institute for Supply Management Chairman Timothy Fiore in a statement. “However, demand remains uncertain, likely impacting inventories, customer inventories, employment, imports and backlog of orders.”
Among the country’s six largest industry sectors, food and beverage and tobacco are the only industries in expansion, researchers found. Transportation equipment, petroleum and coal and fabricated metal products continue to shrink at strong levels, Fiore noted.
In addition to food, beverage and tobacco the other manufacturing sectors to report growth in May included nonmetallic minerals, furniture, apparel, leather and allied products, paper and wood products.
More than 2 million Americans filed for unemployment benefits in the week ended May 23 as the number of workers seeking assistance since pandemic began in mid-March topped 40 million, the U.S. Department of Labor reported last week.