Both expectations and current conditions indicators improved. Current conditions jumped to 103.5 from 99.2 in April, while expectations components rose to 92.7 from 89.1.
The survey shows consumers still ready and eager to spend, which is good news for the economy. There is little short-term change in Fed policy, but a bit more reason to move this summer, says S&P.
May Chicago PMI Index Rises
The May survey by the Chicago Association of Purchasing Managers showed a rise to 60.8 from 54.7 in April. The number remains well above 50, indicating continued strength in manufacturing. Also, the level is much higher than the consensus estimate of 55.0.
The greater manufacturing strength is an early indicator for the national ISM number Monday, and confirms the strength seen in April factory orders. The Chicago report tends to be more concentrated in autos and heavy equipment than the national number.
April Factory Orders Jump 1.2%
New orders from American manufacturers rose 1.2% in April, more than the consensus estimate of 0.8%. Moreover, March was revised sharply higher to show a 1.0% rise rather than the 0.4% reported a month ago.
Orders remain down 4.5% from a year ago year-to-date. Orders for durable goods were revised upward to 1.5% from the 1.1% reported a week ago. Inventories dropped another 0.2%, showing continued run-off. This is the 15th consecutive drop in inventories. Shipments rose 2.4% in April.
The strength in manufaturing is a welcome sign that the recovery is spreading. The continued run-off in inventories, however, should help hold down GDP in the second quarter.