Manufacturing growth slowed to its lowest reading in more than year, according to the latest Manufacturing ISM Report on Business from the Institute for Supply Management, Tempe, Ariz. Economic activity expanded for the 22nd consecutive month and the overall economy grew for the 24th straight, but the PMI dipped 6.9 percentage points to 53.5 percent. It was the first time the reading was under 60 percent in 2011.

“Slower growth in new orders and production are the primary contributors to this month's lower PMI reading,” says Bradley J. Holcomb, chairman of ISM’s Manufacturing Business Survey Committee. “Manufacturers continue to experience significant cost pressures from commodities and other inputs."

Of the 18 manufacturing industries, 14 reported growth in May, including primary metals, fabricated metal products, and appliances and components.  

ISM’s New Orders Index registered 51 percent in May, which is a decrease of 10.7 percentage points when compared to the 61.7 percent reported in April. This is the 23rd consecutive month of growth in the New Orders Index. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders.

ISM’s Production Index registered 54 percent in May, which is a decrease of 9.8 percentage points when compared to the April reading of 63.8 percent. An index above 51 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures. This is the 24th consecutive month the Production Index has registered above 50 percent.

ISM’s Employment Index registered 58.2 percent in May, which is 4.5 percentage points lower than the 62.7 percent reported in April. This is the 20th consecutive month of growth in manufacturing employment. An Employment Index above 50.1 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics data on manufacturing employment.