U.S. Manufacturing Climbs to Its Best Reading Since 2022

A score above 50 signals growth, and May marked the fifth straight month of expansion. From Reuters:

Businesses ranging from ‌transportation equipment to fabricated metal products complained about "escalating" prices and "customers unwilling to commit to expenditures beyond a very short term." A fragile ceasefire was under threat on Monday as the United States and Iran traded attacks, boosting oil prices by more than 3%.

"The durability of this manufacturing upturn remains in doubt," said Oliver Allen, senior U.S. economist at Pantheon Macroeconomics. "Many companies are bringing forward orders and activity to build inventories to protect against supply chain disruptions. That lift likely will be short-lived, and the medium-term outlook for demand still looks shaky."

The ISM said its manufacturing PMI advanced to 54.0 last month, the highest reading since May 2022, from 52.7 in April. A reading above 50 indicates expansion in manufacturing, which accounts for 9.4% of the economy. Economists polled by Reuters had forecast the PMI rising to 53.

Manufacturing has now grown for five straight months after ⁠being dragged down by President Donald Trump's sweeping import tariffs. It is being anchored mostly by an artificial intelligence spending spree. The conflict has severely disrupted the shipping of commodities and raised prices of goods like energy, aluminum and fertilizers.

Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said demand improved while output, orders, and backlogs gained ground. For a country heading toward its 250th birthday, stronger factory floors offer a welcome sign of returning national muscle. From the ISM:

The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management^® (ISM^®) Manufacturing Business Survey Committee.

“The Manufacturing PMI^® registered 54 percent in May, 1.3 percentage points higher than in April and its highest reading since May 2022 (55.9 percent). The overall economy continued in expansion for the 19th month in a row. (A Manufacturing PMI^® above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index expanded for the fifth consecutive month after four straight readings in contraction, registering 56.8 percent, up 2.7 percentage points compared to April’s figure of 54.1 percent. The May reading of the Production Index (54.3 percent) is 0.9 percentage point higher than April’s reading of 53.4 percent. The Prices Index remained in expansion (or ‘increasing’ territory), registering 82.1 percent, a 2.5-percentage point decrease from April’s reading of 84.6 percent. The Backlog of Orders Index registered 52.2 percent, up 0.8 percentage point compared to the 51.4 percent recorded in April. The Employment Index registered 48.6 percent, up 2.2 percentage points from April’s figure of 46.4 percent,” says Spence.

“The Supplier Deliveries Index indicated slowing performance for the sixth month in a row after one month in ‘faster’ territory. The reading of 60.6 percent repeated its April figure after the index increased in each of the previous five months. (Supplier Deliveries is the only ISM^® PMI^® Reports index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

“The Inventories Index registered 49.9 percent, up 0.9 percentage point compared to April’s reading of 49 percent. The Customers’ Inventories Index reading of 42.7 percent is 3.6 percentage points higher as compared to the 39.1 percent recorded in April.

“The New Export Orders Index returned to expansion territory with a reading of 50.6 percent, 2.7 percentage points higher than the 47.9 percent registered in April. The Imports Index registered 53 percent, 2.7 percentage points higher than April’s reading of 50.3 percent.”

New orders rose to 56.8, which put future work on firmer ground. Production climbed to 54.3, and backlogs moved higher to 52.2. Supplier deliveries stayed elevated at 60.6, showing continued strain in the system but also steady demand.

All six of the largest manufacturing industries expanded during May, a broad showing that can't be dismissed as a lucky bounce in one corner of the economy. Plants had more work, more orders, and more reason to keep the lines moving.

Employment still lagged at 48.6, so nobody can pretend the whole report was wrapped neatly into a bow. A reading below 50 points to contraction. Even so, the index improved 2.2 points from April, which means factories cut fewer jobs than before. Prices stayed hot at 82.1 after easing 2.5 points. Inventories reached 49.9, while customer inventories remained lean. Low customer stock often leads to more production later because businesses eventually need to refill shelves, warehouses, and parts bins.

Factory leaders still face pressure from the Iran war, tariffs, energy prices, and unstable supply lines. Survey comments showed heavy concern over prices and supply continuity, and those worries merit attention. Growth built on panic buying or emergency stockpiling can fade if demand weakens later.

Even with those warnings, May's results beat expectations and showed resilience at a time when global supply chains remain stressed. American companies kept producing while other regions struggled with rising input costs and slower demand.

President Donald Trump has made American manufacturing a central part of his economic program. His administration has pushed domestic production, stronger supply chains, and less reliance on foreign competitors. 

May's report doesn't prove every policy fight has ended, and it doesn't erase hiring weakness, but it does show factories moving in the direction Trump promised to encourage.

More orders mean more work; more production means more goods built here; more backlog means companies still need output after current shifts end.

Factories don't run on speeches; they run on orders, parts, skilled hands, diesel, steel, credit, shipping lanes, and customers ready to buy. May delivered encouraging numbers across several of those fronts.

The country still needs better hiring, steadier prices, and fewer supply shocks, but the headline is hard to miss. American manufacturing reached its best ISM reading in four years, and the sector now enters summer with momentum that workers, plant towns, and business owners can feel.