Investing.com – Activity in the US manufacturing sector continued to fall in May with new orders expanding at the slowest rate so far this year, according to preliminary data released on Monday.
In a report, market research group Markit said that its flash manufacturing purchasing managers’ index (PMI) fell to 50.5 in May from the prior month’s final reading of 50.8, which had been its weakest upturn since September 2009.
Analysts had expected an increase to 51.0 this month.
On the index, a reading above 50.0 indicates expansion, below indicates contraction.
May’s reading revealed only a marginal improvement in overall business conditions that was its weakest since the current upturn started in October 2009.
A renewed fall in production, its first decline since September 2009, was one key factor weighing on the headline index in May, according to the report, which also indicated softer new order growth, its weakest in 2016, along with further cuts to stocks of inputs.
Markit chief economist Chris Williamson said that “the weak manufacturing data cast doubt on the ability of the U.S. economy to rebound from its disappointing start to the year in the second quarter”.
“The survey is signaling that manufacturing will act as a drag on economic growth in the second quarter, leaving the economy once again dependent on the service sector, and consumers in particular, to sustain growth,” he added.
In an immediate reaction, EUR/USD was trading at 1.1196 from around 1.1191 ahead of the release of the data, GBP/USD was at 1.4473 from 1.4477 earlier, while USD/JPY was at 109.44 compared to 109.45 earlier.
The US dollar index, which tracks the greenback against a basket of six major rivals, was at 95.41, compared to 95.43 ahead of the report.
Meanwhile, U.S. stocks were trading mixed after the open. The Dow 30 inched up 7 points or 0.04%, the S&P 500 dropped 1 points or 0.06%, while the tech-heavy NASDAQ Composite gained 12 points or 0.24%.
Elsewhere, in the commodities market, gold futures traded at $1,246.25 a troy ounce, compared to $1,246.30 ahead of the data, while crude oil traded at $47.54 a barrel from $47.56 earlier.