ISM Manufacturing Index 52.1 vs 53 est.
US production fell to its lowest level for 2½ years among rising global trade tensions.
The closely monitoring ISM production index fell to 52.1 in May compared to expectations for 53, according to Refinitiv estimates. It was the lowest reading since October 2016.
Construction expenses also disappointed, with a flat reading in relation to expectations of a growth of 0.4% in April.
On the production reading, the major detectors in supplier deliveries came down 2.6 percentage points to 52, and inventories, which fell 2 percentage points to 50.9.
The ISM index represents readings from companies planning to expand. Any reading over 50 is therefore considered expansive.
Respondents comments "still reflects growing business strength, but at soft levels in line with the expansion in early 201[ads1]6, ISM chairman Timothy R. Fiore said in a statement.
The Report comes in the midst of a growing tariff battle between the United States and China, with negotiations at a standstill as the Trump administration seeks concessions and gets more open markets for US goods and to get tighter rules on stealing for intellectual property and forced technology transfer. [19659002] In a statement on Friday, President Donald Trump threatened to expand the fight against Mexico, which he threatened with tariffs if the country does not impede the flow of illegal immigrants to the United States
"The bottom line, if it is a center of trade problems / tariff storms, there is production and the impact continues to become more obvious," Peter Boockvar, chief investment manager at Bleakley Advisory Group, in a note.
Despite the tensions and depressed ones having put on Wall Street and the stock market, the news was not so bad from the ISM report.
The manufacturing index increased 1 point to 51.3 and employment increased by 1.3 points to 53.7. The price index also showed a strong gain, rising from 50 in April to 53.2 in May.
"Respondents expressed concern about escalation in the trade termination between the United States and China, but overall sentiment remains largely positive," added Fiore.
