Investing.com -- Manufacturing activity in the U.S. shrank at a faster pace in May, as companies dealt with higher interest rates that contributed to a decline in new orders.
The Institute for Supply Management (ISM) said its manufacturing purchasing managers' index came in at 46.9, placing it within the sub-50 territory indicating contraction for the seventh straight month. The reading was down from 47.1 in April and below economists' estimates of 47.0.
A slide in new orders gathered steam, with the ISM's forward-looking gauge falling to 42.6 from 45.7 in the prior month. Spiking borrowing costs and a recent tightening of bank lending standards have contributed to lower spending on goods, which are normally purchased with credit.
The drop in demand subsequently impacted factory gate prices. The survey's prices paid measure dropped to 44.2 from 53.2.
Meanwhile, inflationary pressures look to be transferring into services.
The ISM's employment index expanded for a second consecutive month, which could be a precursor to an uptick in manufacturing wages in May.
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