ISM manufacturing index hits 54.0

The Institute for Supply Management’s manufacturing index rose to 54.0 in May from 52.7 in April, according to the group’s report released on June 1. The reading marked a fifth straight month of expansion in factory activity and the highest level since May 2022, when the index stood at 55.9. Susan Spence, chair of ISM’s Manufacturing Business Survey Committee, said the overall economy had now expanded for 19 straight months. The report showed stronger new orders and output, while employment and inventories remained below the 50 threshold that separates expansion from contraction. ### Which parts of the factory report actually improved in May? New orders rose to 56.8 in May from 54.1 in April, and the production index increased to 54.3 from 53.4, ISM said. Backlogs also moved higher, with the backlog of orders index at 52.2 compared with 51.4 a month earlier. Those figures showed demand and output both strengthening at the same time, after manufacturing had already been expanding for four consecutive months. (ismworld.org) The employment index remained in contraction territory at 48.6, but that was up from 46.4 in April. Raw materials inventories also remained slightly below 50 at 49.9, compared with 49.0 in April, according to the report. ### What does the supplier-deliveries number say about supply conditions? (ismworld.org) The supplier deliveries index held at 60.6 in May, the same as in April. ISM treats that index differently from most others: a reading above 50 means deliveries are slowing, which the group says is typical when economic activity improves and customer demand rises. (ismworld.org) Susan Spence said the index had shown slower performance for six straight months after one month in faster territory. That means the May report did not show an outright easing in delivery times; instead, it showed that delivery performance remained slower while orders and production accelerated. (ismworld.org) ### Where do prices, exports and imports stand? The prices index eased to 82.1 in May from 84.6 in April, but remained firmly in increasing territory, ISM said. New export orders returned to expansion at 50.6 after 47.9 in April, while imports rose to 53.0 from 50.3. (ismworld.org) Customers’ inventories rose to 42.7 from 39.1, but ISM still classified them as too low. That combination — low customer inventories alongside stronger new orders — is one of the signals supply executives watch for further production demand. ### Why does the 54.0 reading matter beyond manufacturing? (ismworld.org) ISM said a manufacturing PMI above 47.5 over time generally indicates expansion in the broader U.S. economy. May’s 54.0 reading therefore pointed to continued overall economic growth as well as firmer factory activity. (ismworld.org) The April report had shown a steadier picture, with manufacturing at 52.7 and prices jumping to their highest level since April 2022. May’s increase in the headline PMI came with stronger orders and production, while prices remained elevated and hiring stayed weak. (ismworld.org) ### When is the next ISM update due? ISM’s release calendar says the manufacturing report is issued on the first business day of each month and the services report on the third business day at 10:00 a.m. Eastern. The next scheduled update after the June 1 manufacturing release is the May 2026 Services PMI report on June 3. (ismworld.org 1) (ismworld.org 2)