Economic activity in the U.S. manufacturing sector failed to grow in May for the 16th consecutive month but at a slower pace, the Institute for Supply Management (ISM) reported Monday.
The Tempe, Arizona-based trade group said its manufacturing index, which reflects the opinions of purchasing managers at factories, plants and utilities, registered 42.8 last month, slightly better than the 40.1 reading in April.
A reading above 50 indicates growth while a reading below 50 indicates contraction. Analysts had been expecting a reading of 42. 3 for May.
Last month, the ISM's production index registered 46.0, up from 40.4 in April. The index for new orders rose to 51.1 from 47.2. But the employment index edged down to 34.3 from 34.4.
Five of the 18 manufacturing industries reported growth last month and 13 reported contraction, according to the ISM.
While the sector continued to contract in May, "there are signs of improvement," Norbert Ore, chair of the ISM manufacturing business survey committee, said while releasing the report.
"May is the first month of growth in the new orders index since November 2007, with nine of 18 industries reporting growth," Ore said. "New orders are considered a leading indicator, and the index has risen rapidly after bottoming at 23.1 in December 2008."
The ISM, a trade association representing approximately 40,000 supply management professionals, also said that the overall economy grew for the first time following seven months of decline in May.