The slump in U.S. manufacturing activity deepened in May, marking a seventh straight month of contraction amid greater business uncertainty, according to survey data released Thursday.
The fresh figures from the Institute for Supply Management (ISM) will provide the U.S. Federal Reserve with additional evidence of an economic slowdown as it mulls how best to respond to above-target inflation.
The May ISM figure came in at 46.9%, 0.2 percentage point lower than the 47.1% recorded in April, the ISM said in a statement. This was lower than the median forecast of economists surveyed by MarketWatch.
A reading below 50% indicates that U.S. manufacturing is generally contracting. The lower figure for May vis-a-vis April indicates the contraction in manufacturing is getting deeper.
Members of the Fed’s rate-setting committee are divided over whether to hike interest rates for an 11th time on June 13-14 to bring inflation back down to the bank’s long-run target of 2%.
Amid signs of an economic slowdown, some members have suggested the U.S. central bank should skip an increase this time to allow for more time to look at the impact of existing hikes on the economy.
“The May composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period,” ISM Business Survey Committee chair Timothy Fiore said in a statement.
“However, there is clearly more business uncertainty in May,” he added.
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