Purchasing Chiefs Report Upturn In New Orders
WASHINGTON -- In one of the first signs of a postwar economic bounce, new orders for manufactured goods expanded in May after two consecutive monthly declines, a survey of purchasing managers showed.</br></br>The Institute for Supply Management said its overall index of manufacturing activity, based on the survey, rose to 49.4 in May from 45.4 in April. While it was the third month below 50, which marks the dividing line between an expanding and contracting industrial economy, components of the index were more upbeat.</br></br>For example, the subindexes for new orders and production rose above 50 for the first time in three months, and the subindex for the backlog of orders topped 50 for the first time in 11 months. However, employment contracted again, for the 32nd month in a row, the survey found.</br></br>"Supply managers' comments seem to be split among those who are starting to see improvement, those who see no improvement in sight, and those who are uncertain as to the direction," said Norbert Ore, chairman of the ISM's manufacturing-survey committee and a purchasing executive at Georgia-Pacific Corp. "This is not really unusual when the economy is at a crossroads."</br></br>The index hardly suggests the robust activity of a normal recovery. After expanding most of last year, manufacturing had sunk into a recession in recent months. While Federal Reserve Chairman Alan Greenspan blamed jitters and high energy prices caused by the conflict with Iraq, others blamed the continuing adjustment of consumers and corporations to the decline in asset values and excess capacity, a legacy of the burst stock bubble of the 1990s.