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US manufacturing growth strengthens in May as new orders, output rise

The U.S. manufacturing sector expanded at faster pace in May compared to April as new orders and production rose sharply, according to the latest report by the Institute of Supply Management.

The purchasing managers' index came in at 58.7% in May from 57.3% in April. Sixteen of the 18 manufacturing industries reported growth.

New orders climbed to a reading of 63.7% from 61.2%, and the production index rose to 61.5% from 57.2%.

The employment index increased to 56.3% from 54.2%, and the supplier deliveries index went up to 62% from 61.1%.

Meanwhile, the inventories index fell to 50.2% from 52.9%, and the prices index increased to 79.5% from 79.3%.

Another gauge of the U.S. manufacturing sector's health showed strong growth in May, but a slightly slower pace compared to April.

The IHS Markit final U.S. manufacturing purchasing managers' index slipped to a seasonally adjusted reading of 56.4 from 56.5 in April. A reading above 50 indicates expansion.

The May index reading marked the second strongest improvement in the sector's health since September 2014, driven by sharp increases in production and new business, according to IHS Markit.

Factory output continued to increase at a robust pace in May due to stronger demand, IHS Markit said. Improved demand also drove the sharp increase in new orders, which was the second fastest since September 2014.