THE US recovery was dealt a blow yesterday as a key index suggested that the country’s manufacturing sector contracted during May.
The widely-regarded measure of American factory growth sank to its worst level since June 2009.
The Institute of Supply Management (ISM) reported that its purchasing managers’ index fell to a score of 49. Results below 50 point to economic contraction.
In April the ISM’s reading was at 50.7, pointing to slight economic expansion for US factories.
May’s score was the first time the index has pointed to the industry going backwards since November last year, and only the second time since July 2009.
“With the Chinese PMIs not performing particularly well and the Eurozone index remaining in contraction territory, this ISM report suggests that the global growth story might not be as robust as markets were increasingly pricing in,” said ING’s James Knightley yesterday.
Any prospect of the US Federal Reserve cutting back on its latest asset-purchasing stimulus programme is likely to be delayed until “at least much later in the year,” Knightley added. This Friday’s non-farm payrolls data may also affect the Fed’s decisions.