US: ISM Manufacturing PMI drops to 46.9 in May vs. 47 expected

• US ISM Manufacturing PMI declined slightly in May.
• US Dollar Index stays deep in negative territory below 104.00.

The economic activity in the US manufacturing sector continued to contract at an accelerating pace in May with the ISM Manufacturing PMI dropping to 46.9 from 47.1 in April. This reading came in worse than the market expectation of 47.

Further details of the publication revealed that the New Orders Index declined to 42.6 from 45.7 while the Employment Index improved to 51.4 from 50.2. Finally, the inflation component, Prices Paid Index, fell sharply to 44.2 from 53.2, compared to analysts' estimate of 52.

 Commenting on the report, "the May composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period," said Timothy R. Fiore, Chair of the Institute for Supply Management. 

"The Prices Index fell back into ‘decreasing’ territory (and in dramatic fashion) after one month of increasing prices," Fiore added.

Market reaction

The US Dollar came under renewed selling pressure after this report and the US Dollar Index was last seen losing 0.4% on the day at 103.82.