ISM Manufacturing Might Surprise Positively in May

The ISM manufacturing will be published next Monday (June 3) and some indicators suggest it could surprise positively in May beating expectations of an unchanged reading of 50.7.

Fistly, we can underline that 4 of 6 regional surveys were better in May:


April May
New York 3.05 -1.43
Philadelphia 1.3 -5.2
Kansas City -5 2
Richmond -6 -2
Dallas -10.6 -10.5
Chicago 49.0 58.7


Secondly, this trend seems confirmed by international manufacturing activity as Eurozone, China and Japan surveys also improved:


April May
Eurozone 46.7 47.8
China (Official) 50.6 50.8
Japan 51.1 51.5


Now regarding the components, we could expect a steady increase of “Production” and “Inventories”:


1/ In a previsous article, we saw that US automakers accelerated production lines and, in some cases, even canceled the North American industry’s traditional summer factory shutdowns to meet stronger demand.


2/ The “Inventories” component is not seasonally adjusted and in May, “Inventories” used to grow.


Therefore, according to our analysis, it is likely that manufacturing activity accelerated in May and that the ISM manufacturing will beat expectations.