WASHINGTON—U.S. factory activity edged up in May after slowing for two straight months and private employers stepped up hiring, suggesting the economy is regaining speed after struggling at the start of the year.
The signs of renewed vigor in the economy and labor market tightness could encourage the Federal Reserve to raise interest rates later this month.
The Institute for Supply Management (ISM) said its index of national factory activity ticked up to a reading of 54.9 last month from 54.8 in April. The index hit a 2-1/2-year high of 57.7 in February amid optimism over President Donald Trump’s pro-business policy proposals.
It had declined for two consecutive months amid concerns in the business community that political scandals could derail the Trump administration’s economic agenda, including its push to cut corporate and individual taxes.
A reading above 50 in the ISM index indicates an expansion in manufacturing, which accounts for about 12 percent of the U.S. economy. The manufacturing recovery remains underpinned by the energy sector as steady increases in crude oil prices boost drilling activity, fuelling demand for machinery.
