Purchasers Management Index and Institute for Supply Management data came out this morning. The ISM data provides a good read on May data, a period where indications from the regional Fed surveys was very mixed.

The Institute for Supply Management’s index dropped to 52.1 from 52.8, still above the 50 reading that separates expansion from contraction. The market had forecast 53. Three of five components were down: inventories, production and supplier deliveries.The ISM had fallen 5 of the last 8 months, with April's 2.5 point decline bringing the index down to levels not seen since October 2016. ISM’s production component fell to 51.3 in Backlogs declined to the lowest level since 2017. New orders and employment increased, a positive indicator for the upcoming May jobs report.

The May PMI indicator represents the 121st consecutive month of growth in the overall economy. Manufacturing has been up for 33 consecutive months.

The data, while representing growth, points to slower growth for several months, which the Fed may well point to as a reason for a cutting rates, but the labor market has been strong enough to make that a difficult call. All eyes will be on Friday's jobs report as a signal of overall US economic health and a further determinant of how the Fed will act.

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