Manufacturing growth (ISM) slows

[HenryTo]

Quote: "The Fed has never raised interest rates under Chairman Alan Greenspan's tenure when the ISM stood below 50.0." This is what Don Hays mentioned as well and it now increasingly looks like that the Fed will stop cutting sometime this summer (even ending as soon as the quarter-point increase in the June 29/30 meeting). Note that we have previously mentioned this in our commentaries.
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Manufacturing growth slows

ISM says expansion reaches two-year mark, but pace is weakest since June 2003.
June 1, 2005: 10:23 AM EDT

NEW YORK (CNN/Money) - Growth in the manufacturing sector slowed more than expected in May, according to a survey of industry executives released Wednesday, with the pace at its lowest since an expansion began just about two years ago.

The survey by the Institute of Supply Management produced an manufacturing index of 51.4 in the month, down from the 53.3 reading in April.

Any reading above 50 indicates growth in the sector, and the April number represented the 24th straight month of such growth. But it was also the weakest growth since June 2003, when the current expansion in manufacturing was just getting started.

"While this represents the longest period of growth in the last 16 years, the data also indicates that the sector is losing momentum," said a statement from Norbert Ore, chair of the ISM's Manufacturing Business Survey Committee. "The rate of growth in new orders continues to decline. The manufacturing sector is definitely slowing."

Economists surveyed by Briefing.com had forecast that the May index would come in at 52.0.

The survey's employment subindex fell to 48.8, ending 18 straight months of hiring growth in the sector. The statement from the group said that the combination of a slightly stronger dollar, which makes U.S. goods more expensive to overseas buyers, and continued high energy costs could be bringing the two years of manufacturing growth to an end sooner rather than later.

The weaker than expected report sent bond prices higher and the yield on the 10-year treasury lower in anticipation that the Federal Reserve may be getting closer to the end of its run of regular quarter-percentage point increases in short-term rates. The Fed has never raised interest rates under Chairman Alan Greenspan's tenure when the ISM stood below 50.0.