US manufacturing expands in May, ISM index hits 54

U.S. manufacturing activity expanded in May at its fastest pace in four years, according to data released Monday by the Institute for Supply Management. The group's closely watched manufacturing index rose to 54, marking the highest reading since early 2023 and signaling a broad-based acceleration in the factory sector.

The expansion was driven by a significant increase in new orders, with that sub-index reaching its strongest level in months. Production activity also strengthened, registering its seventh consecutive month of growth. Readings above 50 indicate expansion for the manufacturing sector, and the May figure surpassed economists' expectations.

The improvement was widespread, with 16 of the 17 manufacturing subsectors tracked by ISM reporting growth. Industries showing strength included machinery, transportation equipment, electronics, and appliances. The only sector to contract was wood products.

Employment conditions showed signs of stabilization, though the employment sub-index remained in contraction territory. Survey data indicated that approximately half of manufacturing companies were hiring, while the other half were managing headcounts. Separate data from S&P...