The manufacturing sector showed signs in May that growth may be on its way.
The Purchasing Managers Index, released on Monday by the Institute for Supply Management, rose to 49.4 in May from 45.4 in April. While May's number falls short of an expansion -- any reading below 50 signals shrinkage -- it surpassed expectations, and the details contained in the release showed positive signs. Economists predicted a reading of 48.5, according to Briefing.com.
"Supply managers' comments seem to be split among those who are starting to see improvement, those who see no improvement in sight, and those who are uncertain as to the direction," said Norbert Ore, the chairman of ISM. "This is not really unusual when the economy is at a crossroads. Judging by the reversal in a number of the indexes this month, we are apparently at or near a crossroads."
ISM's New Order Index rose 6.7 percentage points to 51.9 in May, and its Production Index rose 4.5 percentage points to 51.5. Furthermore, 11 of the 20 industries in the manufacturing sector reported growth.
Separately, construction spending fell unexpectedly by 0.3% in April, the Commerce Department said Monday. Wall Street was disappointed with the drop after economists had predicted a rise of 0.2%, according to Briefing.com.
The markets applauded the manufacturing report in Monday morning trading, as the major averages moved up sharply.