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llustration: Sarah Grillo/Axios

Manufacturing growth isn't slowing down.

Why it matters: Reopening means people are spending more on going out, which means service businesses need more goods to accommodate — even as supply chains remain backed up and labor shortages persist.

Driving the news: Manufacturing activity in May rose half a percentage point from April to 61.2%, according to the Manufacturing Purchasing Managers Index (PMI) published Monday.

  • The monthly supply chain survey showed that new orders continue to grow, while order backlogs, empty shelves and production lead times remain at record levels.
  • The Institute for Supply Management (ISM) reported Thursday that business activities for services reached another all-time high in May.

What they're saying: "People are spending more money on services, but that doesn’t take money away from manufacturing," Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee tells Axios.

  • There will be at least a six-month overlap where both the services and manufacturing sectors experience growth — well into the first quarter of next year, and likely through the first half of next year, Fiore says.

What to watch: High manufacturing prices and the worker shortage should start to ease soon.

  • Manufacturing prices are "way outside" the normal range, Fiore says, but he thinks they are close to or at the peak.
  • That's because he expects the labor shortage to end as states end supplemental unemployment benefits in June and September, and parents can send kids to day camp.
  • At every level of the supply chain, "it’s a labor, labor, labor, issue," says Fiore.

The bottom line: Manufacturers are feeling good right now.

  • Optimism on the panel is now more than threefold compared to April — 36 positive comments for every cautious one, versus an 11-to-1 ratio.

Go deeper

A paint maker’s warning on supply chain disruption

Illustration: Annelise Capossela/Axios

Big companies continue to misread how global supply chain issues will affect business. One company just admitted it was too optimistic about its forecasts.

Why it matters: Better-than-expected earnings have helped drive stock prices to new record highs.

Updated 35 mins ago - World

German election: Social Democrats narrowly beat Angela Merkel's bloc

SPD leader Olaf Scholz. Photo: Alex Kraus/Bloomberg via Getty Images

BERLIN — The center-left Social Democratic Party (SDP) clinched a narrow victory in Germany's historic federal elections on Sunday, just four years after suffering its worst loss since World War II.

Why it matters: It's a stunning political comeback for the SPD, paving the way for its chancellor candidate Olaf Scholz to form a new governing coalition and lead Europe's largest economy into the post-Merkel era.

Updated 3 hours ago - Politics & Policy

Liz Cheney: Americans deserve better than choice of Biden or Trump

Rep. Liz Cheney talks with Lesley Stahl on CBS' "60 Minutes." Photo: CBS News

Rep. Liz Cheney (R-Wyo.) told CBS' "60 Minutes" in an interview broadcast Sunday that Americans "deserve better than having to choose between" President Biden's "disastrous" policies and former President Trump, "who violated his oath of office."

Why it matters: Cheney made the remarks after CBS' Lesley Stahl put it to her in the interview that Republicans feel that her joining the House select committee in charge of investigating the Jan. 6 U.S. Capitol riot helps "keep the focus on Trump instead of on the shortcomings of the Biden administration."