The Institute for Supply Management’s index climbed to 51.3 from 50.8 in April, figures from the Tempe, Arizona-based group showed Wednesday. The median forecast in a Bloomberg survey of 81 economists called for 50.3. Readings greater than 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.”