U.S. Manufacturing Activity Rose in May, Hints at Recovery
The Institute for Supply Management reported its index of U.S. manufacturing activity hit 49.4 in May 2003, up from April's 45.4.
While an index below 50 is considered to represent a continued contraction, several individual components of the indicator were above 50. For example, the order backlog indicator was above 50 for the first time since June 2002. Similarly, the indicators for new orders and new production were both above 50.
Manufacturing employment, however, fell again in May. This marks its 32nd consecutive monthly drop reported by the ISM. The continuing decline in manufacturing employment, even though some companies are seeing hints of recovery, is often being called, "the recovery that feels like a recession."
Many manufacturers have said they will not be replacing their laid-off workers even as business begins to improve, citing productivity gains, "right-sizing", and a renewed focus on efficiency ... all of which in the end lessen the need to hire back employees as the workload increases.
Norbert Ore, ISM's survey committee chairman, said, "Supply managers' comments seem to be split among those who are starting to see improvement, those who see no improvement in sight, and those who are uncertain as to the direction. This is not really unusual when the economy is at a crossroads."