Purchasing Report Is Up Again in May

The U.S. economy continued to expand in May, with the National Assoc. of Purchasing Management’s composite index rising to 57.5% from 54.2% in April, the NAPM said Sunday.

This marks the 10th consecutive month the index has registered over 50%, with an average reading of 54.7% for the first five months of 1987.

If this rate is sustained for the rest of the year, it would be consistent with real gross national product growth of about 3.2%, the NAPM said.

An index reading above 50% generally indicates that the economy is in an expanding phase. A reading below 50% implies a declining economy.

The NAPM said the economic improvement was evident in all of the indicators in the index except inventories, which were stable. New orders continued to increase in May, but at a slower pace than in April. The rate of growth in production was only slightly lower than in April, the group’s report said.

Also reflecting expanding growth, vendor deliveries slowed considerably in May, in part due to steelworkers’ return to work after a lengthy strike, the NAPM said.

Employment increased in May for the third month in a row.

‘Economy Healthy’

Albert Bretz, chairman of the NAPM’s business survey committee and director of materials management at Pitney Bowes Inc., said: “The economy showed healthy growth in May. Even without the aid of inventory growth, all indicators point in a positive direction.

“The growth in new orders virtually assures both a good second quarter and first half in 1987,” he said.

For the ninth consecutive month, more purchasers indicated paying higher rather than lower prices. However, for the first time in four months, the rate of price increases slowed.

The composite index is a seasonally adjusted figure, based on five components of the NAPM business survey--new orders, production, vendor deliveries, inventories and employment.

The monthly report is based on questions asked of purchasing managers at 250 U.S. industrial companies.