By Dean Seal

Activity among U.S. goods producers contracted again in May, and at a slightly faster rate than in the previous month, continuing a more than half-year stretch of shrinkage in the manufacturing sector.

The Institute for Supply Management said Thursday that its index of U.S. manufacturing activity slipped to 46.9 in May from 47.1 in April, indicating that companies continue to manage their outputs in an effort to match weakening demand.

The reading was just below economists' consensus forecast of 47.0 in a poll by The Wall Street Journal.

U.S. manufacturing has been losing momentum in recent months as high interest rates and a shift to spending on services put a damper on demand for goods.

May's survey data suggest that companies are pulling back as they prepare for growth in the late summer and early fall period, said Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee.

"However, there is clearly more business uncertainty," he said. "Demand eased again."

The index for new orders remained in contraction territory of less than 50 due to ongoing uncertainty about future demand, falling 3.1 points from April to 42.6.

The production index meanwhile ticked up 2.2 points to 51.1, moving back into expansion territory. Prices swung back into "decreasing" territory with a nine-point drop to 44.2.

The employment index indicated another month of expansion with a 1.2-point jump to 51.4.

Panelists continue to indicate that their employee headcounts are leveling out in terms of expanding and contracting, with mixed sentiment about when meaningful growth might return.

The supplier deliveries index edged down again to 43.5, its lowest reading since March 2009, as delivery times sped up.

Write to Dean Seal at dean.seal@wsj.com

(END) Dow Jones Newswires

June 01, 2023 10:43 ET (14:43 GMT)