US: Headline ISM index to decline slightly to 54.6 in May – Nomura

Analysts at Nomura point out that the latest ISM report suggests some moderation in manufacturers’ optimism as the ISM manufacturing index declined to 54.8 in April after slipping to 57.2 in March, driven by a notable decline in the new orders index.

Key Quotes

“The production index, however, improved modestly by 1pp to 58.6, suggesting manufacturing activity continued to strengthen. On balance, demand from abroad remained healthy in May. The Markit eurozone Manufacturing PMI continued to increase, while the China PMI moderated somewhat, but remained high. Domestic regional surveys, however, sent mixed signals.”

“The Empire State survey headline index declined notably to contractionary territory, but the Philly Fed survey indicated resilient improvement in activity. Complicating matters, it is possible that continued uncertainty regarding proposed health care and tax reforms may have affected manufacturers’ sentiment to some degree. Altogether, we expect the headline ISM index to decline slightly to 54.6 in May (Consensus: 54.6).”