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ISM Manufacturing Drops Below 50

With economists expecting a reading of 50.5, this morning's release of the ISM Manufacturing report for May came in at a level of 49.0, which was weaker than expected.  This was the first sub 50 reading since November 2012, and the weakest reading since June 2009.  While this month's reading was certainly negative, we would remind readers that Manufacturing sector is only a small slice of the US economy.  The more important ISM reading will be Wednesday's release of the ISM Non-Manufacturing.

The table below breaks down this month's ISM Manufacturing report by each of its sub-components.  As shown, only two components (Business and Customer Inventories) showed growth this month, while every other component declined.  Furthermore, seven of the ten subcomponents were under 50, which is indicative of contraction.  Relative to one year ago, the report was a little better as five components showed improvement while five declined.

This month also saw weakness in the number of industries seeing growth in overall business, production, new orders, and employment.  As shown at the bottom of the table, all four categories were lower in May than they were last year, while Employment was the only category where the number of industries seeing growth was unchanged relative to April. 

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