U.S. manufacturing declines slightly, still outperforming competition

June 1, 2012

Although the pace of growth for manufacturing slowed slightly during May, the U.S. sector is still outperforming its competitors and is not slipping into the negatives like several countries with significant industrial holdings.

Bloomberg News reported that manufacturing still grew in the U.S. during May, but the slowed pace resulted from tempered production and pared inventories, as American manufacturers responded to weakness in the global economy.

According to the news outlet, the Institute for Supply Management's factory index fell to 53.5 after reaching a 10-month high of 54.8 in April, showing that a slight drop occurred in the sector. Readings over 50 signal expansion in the industry, and this decrease over the past month has not raised many eyebrows among experts.

"This signals continued moderate economic growth, not any sort of boom or bust," Michael Brown, an economist at Wells Fargo & Co. in Charlotte, North Carolina, told Bloomberg. "You have the uncertainty in Europe, uncertainty around U.S. fiscal policy and the federal budget for next year."

Though several key indices fell during the month, including the measure of production and export orders, the ISM's orders gauge grew from 58.2 to 60.1 for May.

Executives across a number of specific sectors within manufacturing reported positive results despite the overall drop in the ISM index.

"Business has been trending moderately higher since the beginning of the year. [We] anticipate 5 percent to 7 percent growth for the year," said a company within the Chemical Products ISM category.

Other areas showed similar sentiment, according to Bloomberg.

"While not quite as busy as last month, production is steady and year over year still much better," said a company within Transportation Equipment.

Though there was a slight slowdown, much of the drop is attributed to factors outside of the U.S. China is currently struggling, the U.K. manufacturing index showed contraction and European nations were suffering on the whole as few positive reports were issued on the continent.

The Wall Street Journal reported that the U.K. sector sharply contracted in May, as it plummeted to its lowest level in three years. This type of contraction shows how volatile the overall economy, making the performance of U.S. industry seem more positive.