Neil DennisUS manufacturing growth slowed in May according to survey data from purchasing managers and Federal Reserve researchers in the central bank's Richmond district.
A strong performance in May for the US services sector was slightly tarnished by slowing growth in manufacturing, the PMI data indicated.
PMI and Richmond Fed data
The manufacturing index eased back to 52.5 in May from 52.8 in April, defying expectations of a rise to 53. The index has slipped every month since hitting 55 in January.
A measure of manufacturing output in Fed's Richmond district – covering Washington DC, Maryland, North Carolina, South Carolina, Virginia, and most of West Virginia – also proved disappointing.
The Richmond Fed Manufacturing Index fell to 1 in May from 20 in April. Forecasts were for a dip to 15.
Services improve
Service sector activity, however, continued to expand with the index for the sector climbing to 54 in May, from 53.1 in April and beating forecasts for no change from the prior month.
Thanks to the strong performance from US services, the composite index that measures overall business activity in the US climbed to 53.9 from 53.2 in April.
For sale: US home sales fall by 11.4% in April - Source: Metro NewsHouse sales fall
There was also evidence of slowing activity in the construction sector as sales of newly built homes in the US fell 11.4 in April – the most in more than two years.
"This is a terrible report that hit out of nowhere," said Adam Button at Forex Live.
"For the moment, you have to set it aside as an outlier in what looks like a strengthening housing market but it's a big disappointment."
Dollar bounces after euro 6-month high
Currency markets did just that. The dollar climbed 0.2% against the euro, holding on to its gains from earlier as investors took profit in the single European currency after it hit a six month high of $1.1265 earlier in the trading day.
The dollar was also stronger against sterling. The pound was struggling after the terrorist attack in Manchester that killed 22 people, and remained 0.2% lower against the dollar at $1.2974.
