May data indicated a further robust expansion of U.S. manufacturing output, but new business volumes increased at the slowest rate since the start of 2014. Softer growth of incoming new work partly reflected an overall decline in new export sales for the second month running.
Nonetheless, payroll numbers rose at a solid pace, with the latest upturn in manufacturing employment the fastest for six months. Meanwhile, both input prices and output charges increased at modest rates during the latest survey period.
Softer growth of incoming new business was the main factor dragging down the headline PMI in May. New order volumes expanded at the weakest pace for 16 months. Anecdotal evidence from survey respondents cited lower spending among clients in the oil and gas industry, alongside subdued demand patterns in external markets.
May data indicated a slight overall decline in new work from abroad for the second month running, which represented the first back-to-back reduction in export sales since mid-2013. Manufacturers generally noted that the strong dollar continued to have a negative influence on new export order books.
Slower growth in total new business wins contributed to a weaker rise in production volumes in May. The latest increase in manufacturing output was the least marked since December 2014. Moreover, backlogs of work increased only marginally, and at the slowest pace for four months.