U.S. ISM manufacturing PMI 54

The Institute for Supply Management said on June 1 that its U.S. manufacturing PMI rose to 54 in May from 52.7 in April, extending factory-sector expansion to a fifth straight month. The report showed gains in new orders, production, imports and exports, while employment remained in contraction. A reading above 50 indicates expansion, and the May figure was the highest since mid-2022, according to TD Economics and market data summaries. The release added to a run of firmer U.S. activity data that investors have been weighing against expectations for Federal Reserve rate cuts. ### Why did a 54 PMI reading get so much attention? The ISM report said new orders rose to 56.8 in May from 54.1 in April, while production increased to 55.6 from 53.7. Supplier deliveries slowed, prices increased and exports also grew, pointing to broad-based strength across the survey’s components. ISM said economic activity in manufacturing expanded for the fifth consecutive month. (prnewswire.com) TD Economics economist Vikram Rai said the 54.0 reading signaled “a clear re-acceleration in factory activity” and noted that only 2% of manufacturing GDP was now in contraction, down from 19% in April. That made the May report notable not just for staying above 50, but for showing wider participation in the rebound. ### Which parts of the factory report were strongest? (prnewswire.com) The ISM release showed production, new orders, imports and exports all in expansion territory in May. Raw materials inventories contracted and customers’ inventories were described as too low, while employment stayed below 50. That mix suggested demand improved faster than hiring did. (economics.td.com) Trading Economics said the May PMI increased to 54 from 52.7, and Sigmanomics said the reading was up 1.3 points from April and stood above its recent averages. Both summaries pointed to the same direction of travel: stronger manufacturing momentum entering June. ### What does this have to do with the Federal Reserve? Christopher Waller said on May 22 that he had become more concerned that higher energy prices could have a lasting effect on inflation and that he could no longer rule out rate hikes later if inflation did not abate soon. (prnewswire.com) In prepared remarks published by the Federal Reserve, Waller said holding the policy rate steady remained appropriate for now, but the inflation outlook had become less certain. (tradingeconomics.com) Alberto Musalem said in April remarks published by the St. Louis Fed that monetary policy should remain focused on returning inflation to 2%, even as uncertainty around growth and prices persisted. His comments were part of a broader run of hawkish public remarks from Fed officials that investors were already digesting before the ISM release. (federalreserve.gov) ### Where does Yardeni’s “rate hikes are on it” line fit in? Yahoo Finance and Investing.com reported on June 2 that Ed Yardeni’s research firm argued the Fed should raise rates in July and that “rate cuts are off the table; rate hikes are on it.” The firm cited reaccelerating inflation, labor-market stability and rising costs tied to AI infrastructure buildout. (stlouisfed.org) That view is more aggressive than market consensus described in those reports, but it helps explain why a stronger-than-recent ISM print drew attention in rates and currency markets. A firmer manufacturing reading can reinforce the case that the economy is still expanding at a pace that does not compel immediate easing. (finance.yahoo.com) ### What comes next after this report? The Institute for Supply Management said its next Manufacturing PMI report, covering June 2026 data, will be released at 10:00 a.m. ET on Wednesday, July 1, 2026. Between now and then, investors are expected to track incoming inflation data and comments from Federal Reserve officials including Waller and Musalem ahead of the June 16-17 Federal Open Market Committee meeting cited in Yardeni-related reports. (finance.yahoo.com) (prnewswire.com)