Activity in the U.S. manufacturing sector grew faster than anticipated in the month of May, according to a report released by the Institute for Supply Management on Monday.
The ISM said its purchasing managers index climbed to 52.8 in May from 51.5 in April, with a reading above 50 indicating growth in the manufacturing sector. Economists had expected the index to inch up to 51.8.
The bigger than expected increase by the headline index was partly due to a notable turnaround by employment, as the employment index jumped to 51.7 in May from 48.3 in April.
The report also showed a notable improvement by new orders, with the new orders index rising to 55.8 in May from 53.5 in the previous month.
On the other hand, the production index slid to 54.5 in May from 56.0 in April, indicating a slowdown in the pace of growth.
Bradley J. Holcomb, chair of the ISM Manufacturing Business Survey Committee, 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," he added.
The report also said the prices index surged up to 49.5 in May from 40.5 in April, although the reading below 50 points to the seven straight month of lower raw materials prices.
Wednesday morning, the ISM is scheduled to release a separate report on activity in the service sector in the month of May.
Economists currently expect the index of activity in the service sector to dip to 57.2 in May from 57.8 in April, indicating a slight slowdown in the pace of growth.
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