US ISM manufacturing index likely to have dropped below breakeven in May

The US ISM manufacturing index might have fallen lower than breakeven in May. Societe Generale, in a research report, said the ISM manufacturing index might have dropped to 49.8. Given the regional manufacturing gauges, factory activity in the period is expected to have weakened.

For instance, the ISM-adjusted Empire state index dropped to 48.1 from 51.9, the Philadelphia Fed barometer was at 47, below breakeven, and the adjusted Richmond Fed manufacturing measure fell to 51.8. Meanwhile, the Markit PMI dropped slightly in May to 50.5 from 50.8. Confirming the regional factory measures, capital goods orders in April continued to be subdued.

Meanwhile, the total motor vehicle sales in the US are likely to have continued being strong in May, according to Societe Generale. The sales figures are expected to have stayed robust at a seasonally adjusted figure of 17.2 million. 

This might be in line with the 13.3 million motor vehicles sold domestically, said Societe Generale. The above mentioned expectations are based on certain factors. The conditions of the US labor market continue to be strong, while costs of gasoline remain relatively low. Moreover, Germany’s business conditions, gauged by the Ifo index, continue to be resilient.