• ISM Manufacturing PMI declined in May, pointing to ongoing contraction.
• US Dollar stays under bearish pressure after disappointing PMI data.

The business activity in the US manufacturing sector contracted at an accelerating pace in May, with the ISM Manufacturing PMI dropping to 48.7 from 49.2 in April. This reading came in below the market expectation of 49.6.

The Employment Index of the PMI survey improved to 51.1 in May from 48.6 in April, while the New Orders Index slumped to 45.4 from 49.1. Finally, the Prices Paid Index, the inflation component, retreated to 57 from 60.9 in the same period.

Commenting on the survey's findings, "US manufacturing activity continued in contraction after growing in March, the first expansion for the sector since September 2022. Demand was soft again, output was stable, and inputs stayed accommodative," said Timothy R. Fiore, Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.

Market reaction

The US Dollar (USD) came under renewed selling pressure following this report. At the time of press, the USD Index was down 0.28% on the day at 104.33.