How ISM Manufacturing Data May Help Fed on Rate Hikes

The ISM said that economic activity expanded in the manufacturing sector for the 29th consecutive month in May. Furthermore, the overall economy grew for the 72nd consecutive month, according to the ISM Report On Business.

Key metrics inside the report were as follows:

• The New Orders Index was 55.8%, an increase of 2.3 points from the 53.5% in April.
• The Production Index was 54.5%, 1.5 points below the April reading of 56.0%.
• The Employment Index was 51.7%, 3.4 percentage points above the April reading of 48.3%. This was said to indicate rising employment.
• Inventories of raw materials was 51.5%, up 2.0 full points from the April reading of 49.5%.
• The Prices Index was 49.5%, 9.0 full points above the April reading of 40.5%. This still indicates lower raw materials prices for the seventh consecutive month.

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The report further said:

Comments from the panel carry a positive tone in terms of an improving economy, increasing demand, and improving flow of goods through the West Coast ports. Also noted; however, are continuing concerns over the price of the US dollar and challenges affecting markets related to oil and gas industries.

The Federal Reserve is on the outlook for positive data that will allow it to raise interest rates. The ISM report might not be enough alone, but this was better than what the market was calling for.