U.S. manufacturing activity eased off an 11-year low in May, the strongest sign yet that the worst of the economic downturn was behind as businesses reopen, though the recovery from the COVID-19 crisis could take years because of high unemployment.
FILE PHOTO: A worker disinfects machinery with a bleach mixture at the start of a shift at Green Circuits as the company, an essential business, adapts to operating during the outbreak of the fast-spreading coronavirus disease in San Jose, California, U.S., April 2, 2020. REUTERS/Stephen Lam/File Photo
The ISM said its index of national factory activity rose to a reading of 43.1 last month from 41.5 in April, which was the lowest level since April 2009. A reading below 50 indicates contraction in manufacturing, which accounts for 11% of the U.S. economy. May marked the third straight monthly contraction.
Stocks on Wall Street were higher, though caution reigned amid country-wide protests over race relations and a flare-up in tensions between Washington and Beijing. The dollar fell against a basket of currencies. U.S. Treasury prices slipped.The economy contracted at a 5% annualized rate in the first quarter, the worst performance since the 2007-09 recession.
“Manufacturers are being squeezed by both a collapse in demand and disrupted supply chains,” said James Knightley, chief international economist at ING in New York. “With profitability under immense pressure firms are increasingly looking to cut costs, which will limit the ability of the U.S. economy to rebound quickly.”
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