US Manufacturing Expands in May

US Manufacturing expanded faster than predicted in May, boosted by a surge in factory orders that shows U.S. manufacturing is rebounding from an early year slump.

The Supply Management’s index rose to 51.3 from 50.8 in April, while the median forecast of 81 economists called for 50.3. Readings above 50 indicate growth.

Factories are using a pickup in bookings from the U.S. and abroad to help trim stockpiles, laying the ground for bigger gains in production later in the year. The recent pickup in oil prices also will probably help stem the slump among energy producers that has contributed to weak business investment.

“Manufacturing will be on a slow, gradual path of improvement,” Sam Bullard, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “Hopefully, we’re in a stabilization process in energy and mining.”

One weak spot was the factory employment measure, which held at 49.2, indicating manufacturers trimmed payrolls last month.

In other signs that the industry is turning around, the index of supplier deliveries jumped to 54.1, the highest level since December 2014, from 49.1. A reading greater than 50 means shipments slowed, which often happens when suppliers have trouble keeping up with demand.