The latest data for the U.S. manufacturing sector showed a steep drop in activity, while another report showed that job growth slowed to nearly a halt, according to The Wall Street Journal. On Wednesday, the Institute for Supply Management reported that its purchasing manager’s index for U.S. manufacturing dropped to 53.5 in May from 60.4 the previous month, far outpacing economists’ forecast for about a three-point drop. The reading barely stayed about the 50-point marker indicating growth due to a drop in excess of 10 points in the sub-index for new orders. The gauge of production was down sharply as well.
Other readings were also down, including the inventory index, the index for prices, and the gauge for employment. Meanwhile, a separate report from Automatic Data Processing and Macroeconomic Advisers showed that the U.S. private sector added only 38,000 jobs during May, which was a shock to economists expecting private-sector growth of 190,000 jobs after an increase of 177,000 in April. The report showed that small- and medium-sized businesses added jobs slowly, while businesses with over 500 employees cut back on payrolls. Additionally, Challenger Gray & Christmas reported that job cuts are down 21% in the year-to-date from the same period one year earlier.