ISM Report: Manufacturing PMI Registers 48.5% in May, Its Lowest Reading Since November 2024
The ISM (Institute for Supply Management) Manufacturing PMI registered 48.5% last month, marking the third consecutive month of contraction. The PMI fell 0.2 percentage points from April’s reading of 48.7%, indicating manufacturing economic activity contracted at a faster rate in May.
“Of the five subindexes that directly factor into the Manufacturing PMI, only one (supplier deliveries) was in expansion territory, down from two in April,” says Susan Spence, chair of the ISM’s manufacturing business survey committee.
Although 0.4 points higher than April’s reading, the new orders index remained in contraction territory at 47.6% in May. Anything lower than 50% represents contraction.
The production and employment indexes also continued contraction at a slower rate, registering 45.4% and 46.8%, respectively.
Down a drastic 7.2 points from April’s 47.1%, the imports index fell into extreme contraction with a May reading of 39.9%.
“Imports continue to contract as demand has reduced the need to maintain import levels from previous months, as well as due to the impact of tariff pricing,” Spence says.
Seven industries reported growth in May:
- Plastics & rubber products
- Nonmetallic mineral products
- Petroleum & coal products
- Furniture & related products
- Electrical equipment, appliances & components
- Fabricated metal products
- Machinery
“Of the six largest manufacturing industries, two (petroleum & coal products and machinery) expanded in May, compared to four in April,” Spence says.
Concerns surrounding tariffs continue to dominate the comments section of the survey.
“There is continued uncertainty regarding market reaction to the recently imposed tariffs and resulting actions by other countries. The rare earth restrictions being imposed are of high concern in the near term,” reports a respondent from the machinery industry.
A respondent from the transportation equipment sector writes, “There is continued softening of demand in the commercial vehicle market, primarily related to higher prices and economic uncertainty. The impact of ever-changing trade policies of the current administration has wreaked havoc on suppliers’ ability to react and remain profitable.”
