ISM Corrects Reading on Key Factory Gauge

The Institute for Supply Management corrected its closely-watched measure of U.S. factory twice after it was released on Monday.

The ISM purchasing managers index was revised to a reading of 55.4 for the month of May, after a previous correction to 56. ISM initially posted a reading of 53.2 for the month, up from 54.9 in April. The new PMI figure comes in slightly below expectations of 55.5.

Readings above 50 indicate the manufacturing sector in the world's largest economy is accelerating, while those below point to contraction.

Wall Street pared early losses after reports surfaced, saying ISM incorrectly accounted for seasonal adjustments. Traders were baffled by the mistake made in the frequently market-moving report. In fact, Peter Boockvar, chief market analyst at The Lindsey Group, said the mistake was "bizarre."

Bradley Holcomb, chair of ISM's manufacturing business survey committee, apologized for the issue, saying in a statement that "our research team is analyzing our internal processes to ensure that this doesn’t happen again."

A separate report released Monday by UK-based Markit showed U.S. factory activity struck a three-month high in May. The data provider's PMI gauge rose to 56.4 from 55.4.

"The survey puts the sector on course to provide a substantial boost to gross domestic product in the second quarter, and therefore adds to signs that the economy has enjoyed a strong revival after shrinking due to the adverse weather at the start of the year," Chris Williamson, the company's chief economist, said in a report.

The duo of reports on the American economy come on the back of a slight pickup seen in China's vast factory sector.