US manufacturing sector continues to deteriorate for 7th month

The contraction in manufacturing activity in the US continued for the 7th month due to the decrease in orders. The ISM manufacturing index in the US fell from 47.1 to 46.9 in May. The median estimate of economists who participated in the Bloomberg survey was 47. Thus, the decline in the index continued for the 7th month and entered its longest downward trend since 2009. The decrease in orders due to high interest rates triggered the decline in the index. A value below 50 in the index indicates a contraction in the sector. The new orders index fell from 45.7 in April to 42.6, and the price paid index fell from 53.2 to 44.2. The employment index rose from 50.2 to 51.4. The ongoing decline in the manufacturing index increases expectations that the economy will enter a recession this year. The manufacturing sector, which makes up about 11 percent of the U.S. economy, has been negatively affected by the Fed's policy since March 2022. The U.S. Central Bank is implementing its most aggressive interest rate hike policy since the 1980s to rein in high inflation.