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U.S. manufacturing expanded in May for the fifth consecutive month, with May's PMI of 54% the strongest print since May 2022 and representing a 1.3-percentage-point improvement over April's 52.7% reading, with gains in new orders and production driving the increase.
All six of the largest manufacturing industries expanded in May, ISM said. New orders grew for a fifth straight month, with the New Orders Index rising to 56.8%, while the Production Index reached 54.3% for its seventh consecutive month of expansion. Wood products was the lone holdout among the 17 industries ISM tracks, with all others recording expansion in May.
Despite the strong headline figure, cost pressures remained acute. The ISM Prices Index registered 82.1% in May — still near its highest level since 2022, even after easing 2.5 percentage points from April. ISM Manufacturing Business Survey Committee Chair Susan Spence said price increases continue to be driven by higher steel and aluminum costs, tariffs on imported goods, and petroleum-based product inflation tied to the Middle East conflict. No commodities were reported down in price in May.
According to Spence, sentiment in panelist comments skewed heavily pessimistic — 69% negative versus 25% positive. References to the Iran war appeared in 42% of all responses, while tariffs came up in 18%. Pricing volatility was identified as a direct operational concern by 57% of respondents. A respondent from the transportation equipment sector quoted in the ISM report warned that the Iran conflict was beginning to hit supply chain costs directly, with oil and related commodities rising sharply in price. A miscellaneous manufacturing respondent described "extreme uncertainty" over price stability and supply continuity tied to the Iran conflict and Strait of Hormuz closure.
