US manufacturing contracts in May

AAP

US manufacturing activity contracted slightly in May, continuing a slowdown tied both to slower government spending and weaker growth abroad, the Institute for Supply Management (ISM) says.

The ISM purchasing managers index for May fell to 49.0, one point below the line between growth and contraction, compared with a positive 50.7 in April.

Production and new orders both shrank, while employment was virtually flat in the manufacturing sector.

Inventories of both suppliers and customer fell, and prices decreased as well.

Survey respondents pointed to slower economic growth both inside the country and abroad, the ISM said on Monday.

"Government spending has tightened, which has moved out program awards and caused some reduction in force," said one respondent from the computer and electronic products sector.

Another from the machinery sector said the downturn in European and Chinese markets was "having a negative effect on our business".

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