US ISM manufacturing PMI for May 56.1 vs. 54.5 estimate

• Last month 55.4
• ISM manufacturing PMI 56.1 vs. 54.5 estimate
• Prices paid 82.2 vs. 83.0 estimate. Last month 84.6
• Employment 49.6 vs. 50.9 last month
• New orders 55.1 vs. 53.5 last month
• Production 54.2 vs. 53.6 last month
• Supplier deliveries 65.7 vs. 67.2 last month
• Inventories 55.9 vs. 51.6 last month
• Customers inventories 32.7 vs. 37.1 last month
• Backlog of orders 58.7 vs. 56.0 last month
• Exports 52.9 vs. 52.7 last month
• Imports 48.7 vs. 51.4 last month

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The report is a good report although employment is contracting. Customer inventories are considered too low still. Prices continue to increase but at a slower pace. New orders grew at a faster pace.

Some comments from survey respondents:

• “Suppliers are seeing a light at the end of the tunnel for restoration of (semiconductor) component supply. Second-quarter and Q3 supply appears to be loosening.” [Computer & Electronic Products]
• “While orders remain strong and backlogs exist, there’s a softening in forecasted orders for leading indicator-type customers and business units.” [Chemical Products]
• “The challenge with semiconductors hasn’t softened; the situation is worsening due to Chinese COVID-19 lockdowns.” [Transportation Equipment]
• “Input costs, particularly grain, oil, dairy and protein, are rising faster than can be passed along at retail and food service, with no relief in sight.” [Food, Beverage & Tobacco Products]
• “Our order books are still strong. Material prices continue to rise, with energy and freight noted as the underlying influences on increased costs.” [Machinery]
• “Shanghai has been shut down since mid-March. All of the (population) is in lockdown, with no production or port activities. Steel remains in allocation. Electronics lead times are more than 12 months.” [Fabricated Metal Products]
• “Supply chain issues are causing us to dramatically extend our lead times. Our production lines have (run) low on or out of parts needed to complete rates every week this month.” [Miscellaneous Manufacturing]
• “We’ve continued to transition to North American sales to avoid ocean vessels, and we are apprehensive about the West Coast ports’ labor contract negotiations. A challenge of doing more business by rail is the backlog of rail cars and embargos.” [Paper Products]
• “Price increases haven’t let up. I thought 2022 was going to be better, but it hasn’t been. Shortages (among other issues) are still disrupting the supply chain.” [Plastics & Rubber Products]
• “Business is steady. We consolidated shifts and do maintenance on off hours, which is working well.” [Primary Metals]

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