Economic Data Are Mixed

Economic indicators showed a mixed picture for U.S. manufacturing over the past couple of months. NAM Chief Economist Chad Moutray gave us the lowdown.

Durable goods rise: “New orders for durable goods rose 0.4% from $264.2 billion in March to a record $265.3 billion in April,” said Moutray. “Excluding transportation equipment, new durable goods orders increased 0.3% from $178.0 billion to $178.6 billion, an all-time high.”

What it means: “These data continue to reflect resilience in the manufacturing sector despite supply chain bottlenecks, global uncertainties, workforce shortages and soaring costs. With that said, this was slower than the expected gain of 0.7% among forecasters. Nonetheless, new orders have jumped 12.2% over the past 12 months, or 7.6% with transportation equipment excluded.”

Manufacturing PMI falls: “The S&P Global Flash U.S. Manufacturing PMI declined from 59.2 in April to 57.5 in May, a three-month low,” said Moutray.

“New orders (down from 59.0 to 56.9), output (down from 57.6 to 55.2) and exports (down from 56.4 to 52.3) slowed in May.”
“As such, manufacturing activity continued to expand somewhat modestly but pulled back on global challenges and ongoing supply chain, workforce and inflationary pressures.”

Challenges continue: “Raw material costs (up from 81.9 to 84.9) accelerated once again, rising at a pace not far from November’s record (87.6),” said Moutray.

What’s ahead: “Still, the index for future output (down from 73.6 to 70.3) signaled optimism about production growth moving forward despite pulling back a little in May’s survey,” said Moutray.

Across the pond: “Meanwhile, the S&P Global Flash Eurozone Manufacturing PMI decreased from 55.5 in April to 54.4 in May, the weakest reading since November 2020,” said Moutray.

“The Russian invasion of Ukraine continued to impact activity negatively, with new orders contracting for the first time since June 2020 and with exports declining for the third straight month. With that said, output and employment growth picked up somewhat in May.”