WASHINGTON – American factories grew at a slightly faster pace in May, another sign that manufacturing remains healthy.
The Institute for Supply Management says its manufacturing index rose to 54.9 last month from 54.8 in April. Anything above 50 signals that factories are expanding. They have now registered nine straight months of growth. May's improvement was unexpected: Economists had expected the index to fall slightly last month.
New orders and hiring grew faster in May. Production and export orders grew more slowly.
Fifteen of 18 manufacturing industries posted growth last month, led by minerals and furniture companies.
One potential blemish in the report was an uptick in inventories last month, a sign that factories are turning out products faster than customers are buying them. In fact, the Commerce Department reported last week that consumer spending on long-lasting manufactured goods fell at an annual pace of 1.4 percent from January through March, weakest performance since 2011.
Overall, though, U.S. factories have largely recovered from a slump in late 2015 and early 2016 caused by cutbacks in the energy industry and a strong dollar, which makes U.S. goods more expensive in foreign markets. The Labor Department says manufacturers have added jobs for five straight months.