U.S. manufacturing activity contracted for the third consecutive month in May, as ongoing tariff pressures, weak global demand, and supply chain slowdowns continued to weigh on factory output, according to the Institute for Supply Management.
The Manufacturing Purchasing Managers’ Index (PMI) fell slightly to 48.5%, down from April’s 48.7%, remaining below the neutral 50% mark that separates growth from contraction. Despite broader economic growth continuing for a 61st straight month, manufacturing remains under pressure.
“U.S. manufacturing activity slipped further into contraction after expanding only marginally in February,” said Susan Spence, chair of ISM’s Manufacturing Business Survey Committee. “Order books are still weak, and companies are revising production plans downward amid economic uncertainty.”
New orders remained in contraction territory at 47.6%, though slightly improved from April. The Production Index rose to 45.4%, indicating output is declining at a slower pace. The Employment Index inched up to 46.8% but showed continued job cuts driven largely by layoffs.
Input costs and supplier delays persisted. The Prices Index remained elevated at 69.4%, with respondents citing increases in aluminum and steel prices. Supplier deliveries slowed further, and inventories declined sharply as companies pulled back on purchases made ahead of anticipated tariffs.
Exports and imports saw steep declines, with the New Export Orders Index dropping to 40.1%—its lowest level since the COVID-19 pandemic—and the Imports Index falling to 39.9%, both reflecting the impact of weakening international demand and trade policy uncertainty.
Of the six largest manufacturing industries, only petroleum and coal products and machinery showed growth in May.
“Tariffs, government spending uncertainty, and economic volatility are making it difficult for businesses to plan or absorb costs,” one survey respondent said.
