US ISM PMI increase to 61.2 in May 2021.

The prices had remained at a lofty level (88, -1.6) because of the persistent high freight costs, higher crude prices, and rising material prices which still maintained the supplier’s deliveries at a high level of 78.8 (+3.8) and a higher number indicated slower deliveries.  The producers seemed to be stocking up on inventories (50.8, +4.3) in anticipation of rising inflation which increased import and local raw material.

The employment (50.9, -4.2) fell in sync with the drop in production (58.4, -4) which might denote some problem in increasing production.  This could be due to difficulties in retaining and finding workers.

The new order increased to 67 (+2.7) because of rising new export and local orders which caused the customers’ inventories to be depleted further.  As the producers couldn’t produce enough to meet the customers’ demands, the backlog order also increased to 70.6 (+2.4).

All the above factors caused the PMI to increase to 61.2 (+0.5).  In conclusion, this PMI indicates that the US economic growth will be sustained in the coming months.  Furthermore, the low customers’ inventories and inflation will keep prices at a lofty level.