US manufacturing revival 'at risk', surveys suggest

Activity in the US manufacturing sector picked up slightly in May Economists say conditions in manufacturing are still 'downbeat'

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The US manufacturing sector struggled to grow in May, two surveys have shown, underlining worries over the pace of economic recovery.

The Institute of Supply Management's manufacturing activity index fell in May to its lowest since June 2009.

Markit's May purchasing managers' index rose, but the increase was too small to point to a sector revival.

The closely-watched reports dampened sentiment on Wall Street, with shares barely up in mid-morning trading.

The Institute for Supply Management (ISM) said that its index of manufacturing activity fell to 49 last month from 50.7 in April.

The reading is the index's lowest level in almost four years, and marks the first time the index has dipped below 50 since November. A reading under 50 indicates a contraction.

"The pull-back of the ISM manufacturing index is a serious bump for the second quarter," said Mei Li at FTN Financial.

Meanwhile, Markit's PMI index rose to 52.3 from 52.1 in April, remaining above the 50 mark.

"The May survey paints a downbeat picture of US manufacturing business conditions. Output, order books and employment are all growing modestly, suggesting the sector is at risk of stalling," said Chris Williamson, chief economist at Markit.

Mr Williamson warned that the slow rate of growth in manufacturing could hit US growth in the second quarter.

The US economy grew at an annualised rate of 2.4% in the first three months of the year, but economists widely expect growth to slow again in the next three months, due in part to the slowdown in the manufacturing sector.

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