The Institute for Supply Management's Chicago PMI reading jumped to 62.7 in May from 49.2 in April, larger than the expected 50.3 reading in a survey compiled by Bloomberg and the highest reading in over four years.
Other regional manufacturing data already released for May have been overwhelmingly positive, with the exception of a decline in the Philadelphia Federal Reserve's reading.
The national ISM manufacturing index will be released on June 1.
Federal Reserve Vice Chair for Supervision Michelle Bowman said Friday that she is looking for more clarity on the Middle East conflict before determining the monetary policy path forward, noting the risks of overreaction to temporary factors."Economic research suggests that, in response to temporary adverse energy supply shocks, policy should not be overly aggressive at stabilizing total inflation to keep employment close to our maximum-employment goal," Bowman said at the Reykjavik Economic Conference. "Reacting to temporarily elevated energy price inflation would add unwarranted policy restraint, weighing unnecessarily on economic activity and labor market conditions."Bowman supported maintaining language in the last post-meeting statement from the Federal Open Market Committee that left open the possibility of rate reductions. Three of her FOMC colleagues dissented in favor of removing that language."It is appropriate to look through temporarily elevated inflation readings largely due to higher energy prices, provided that we remain credible in our commitment to achieve our inflation goal and one-off tariff effects wane, as I expect," Bowman said.Maintaining the current policy stance will allow for stable labor market conditions while helping to lower inflation toward the Fed's 2% goal once those temporary impacts dissipate, she said."But the longer the conflict persists, the more we should consider the effects on inflation in our outlook," Bowman added. "In particular, the more persistent higher oil prices are -- or if we start to see broader effects of higher energy prices on PCE inflation -- the more likely I will consider shifting my approach to thinking about the balance of risks."
The US advance international trade in goods deficit narrowed to $82.40 billion in April from $85.27 billion in March, according to data released by the US Census Bureau.This was a smaller gap than the $87 billion deficit expected in a survey compiled by Bloomberg.Exports rose by 4.0% in April while imports were up 1.9%.In the same report, wholesale inventories rose by 0.5% in April after a 1.5% increase in March. Analysts polled by Bloomberg expected wholesale inventories to increase by 0.8%.Retail inventories were up 0.7% in April following a 0.7% increase in the previous month. This was a larger increase than the 0.5% increase expected by analysts. Excluding a 0.9% increase in motor vehicle inventories, retail inventories increased by 0.6% in the month.