May Manufacturing Final Index Signals Marginal Growth

At a very weak 50.5, the final manufacturing index for May is 1 tenth below its 50.6 flash estimate and 2.1 points below final April. This index broke to 10-year lows in the May flash and is at risk of falling below 50 and into contraction. For now, the index is signaling only marginal growth for a US manufacturing sector that is being held down by weak exports and risk, giving building trade tensions with China and Mexico, of falling into outright contraction.

New orders are already in contraction, though only slightly, for their weakest showing in 10 years. Export orders are also in marginal contraction. Expectations for growth are also at deep low with respondents highlighting global trade tensions. Price pressures going into possibly higher tariffs are modest, while production and employment growth are also modest.

Today's report falls in line with other global PMIs that are balancing precariously at breakeven 50 or, like Germany, have fallen well down into the 40s. The factory sector is increasingly not looking like it is contributing to overall growth.