Analysts at Nomura note that the US ISM manufacturing survey increased to 58.7 in May, above expectations (Nomura: 58.0, Consensus: 58.2), as manufacturing activity accelerated despite continued uncertainty over US trade policy.
“Brightening business prospects for 2018 appear to be more than offsetting concerns about rising input costs and supply constraints. The report overall punctuates a string of healthy data for the US economy as Q2 appears set to show real GDP growth above 3% q-o-q saar. The strong increases in the production index (+4.3pp) and new orders index (+2.5pp) indicate a pickup in both contemporaneous activity and near-term momentum, consistent with other incoming data on Q2. Elsewhere, the backlog of orders and supplier deliveries indices both showed increases, suggesting elevated levels of demand.”
“The pickup in manufacturing activity was broad-based, even beyond the ISM manufacturing report, and fits well with the June Beige Book which referenced an acceleration in manufacturing activity in recent weeks. Manufacturing surveys from the Dallas, Kansas City, New York, Philadelphia and Richmond Federal Reserve Banks all showed an improvement during May.”