Geoffrey Smith 

Investing.com — The closely-watched gauge of U.S. industrial activity increased in May. This is a surprising sign that momentum for the U.S. recovery continues into the summer.

According to the Institute of Supply Management, manufacturing increased to 56.1 in May from 55.4 in April. This was despite expectations of a small drop to 54.5.

A reading higher than 50 indicates economic expansion. Since April 2021 when the recovery dynamic following the pandemic hit its peak, the ISM PMI has shown a declining trend, however, its readings remain well above 50.  

“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment,” the ISM chair Timothy Fiore said in a statement. Although the employment subindex was actually below 50, Fiore noted that companies had made significant progress towards addressing medium-term labor shortages in all levels of their supply chains.

He added that all of the six biggest manufacturing industries — machinery, computers & electronics, food and drink, transportation equipment, petroleum and coal products, and chemicals — registered moderate-to-strong growth in the month.

PMI’s subindex rose to 55.1 from 53.5. Also, there was some progress in input price pressures. Sub-index fell from 84.6 and 82.2.