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Report On Business® Roundup: May Manufacturing PMI®

June 02, 2025
By Dan Zeiger

The Manufacturing ISM® Report On Business® for May made the impact of the Trump administration’s constantly shifting trade policy abundantly clear, from the overwhelming share of survey respondents’ comments on tariffs to the New Export Orders and Imports indexes hitting Great Recession-level lows.

The Manufacturing PMI® registered 48.5 percent, just 0.2 percentage point below the previous month’s figure. While there were no recession red lights blinking in the data, it was still a doozy of a debut report for Susan Spence, MBA, the new Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

The U.S. factory activity slog continued as lead times slowed, with the Supplier Deliveries Index elevating to 56.1 percent. That increase was not due to demand, which weakened, but rather transactions and shipments getting bogged down in the trade mire, including haggles over which party will pay for tariffs.

“I recently did a rough timeline since January and counted 32 different dates there has been (trade or tariffs) news, or a reversal,” Spence said in a conference call with reporters on Monday. “With the uncertainty, manufacturers need to figure out and forecast profitability based on cost of material. It can be frustrating to have to do it multiple times a month or quarter. Lately, it’s been multiple times a week.

“So, (the current situation) is not benefiting anybody right now, that’s for sure.”

Wrote a Business Survey Committee panelist in Electrical Equipment, Appliances & Components, “The administration’s tariffs alone have created supply chain disruptions rivaling that of COVID-19.”

More squabbles between buyers and suppliers are likely, with President Donald Trump announcing a doubling of tariffs on aluminum and steel. The tariffs are already weighing down the data, including 86 percent of respondents’ comments and, most strikingly, the drops of the New Exports and Imports indexes, which do not directly factor into the PMI®.

The New Export Orders Index has dropped 12.3 percentage points in the last three months to register 40.1 percent in May, the lowest reading (not counting the coronavirus pandemic) since March 2009 (39.4 percent). The Imports Index has sunk 12.7 points since February to hit 39.9 percent, the lowest since May 2009 (38.5 percent).

Those indexes were among “the story of the day,” Spence said, particularly the exports reading that exemplified the sluggish demand. The New Orders Index registered 47.6 percent to remain in contraction for the fourth consecutive month, and the Backlog of Orders Index reading of 47.1 percent was the 32nd in a row indicating shrinkage.

For a second straight month, the one ray of sunshine in the report might have been the Customers’ Inventories Index, which slipped even further into “too low” territory at 44.5 percent. “Those customers are going to have to reorder at some point,” Spence said.

The Production Index ticked up to 45.4 percent, up from the reading of 44 percent in April that was called “alarming” by former Business Survey Committee Chair Timothy R. Fiore, CPSM, C.P.M. Spence also expressed concern about production, citing the Inventories Index falling into contraction at 46.7 percent, down 4.1 percentage points compared to April.

That decline was expected, as companies completed pull-forward activity to get ahead of tariffs. Spence said that imports contraction, a weak backlog and declining inventories are not an ideal recipe for future production.

“You need something coming in to be able to produce,” she said. “If inputs continue to be down and you’re depleting what you have between your four walls, how can production go up? We’ll keep an eye on it next month, but it doesn’t seem as if things are going in the right order.”

Multiple times during the conference call, Spence broke down the PMI® data by relating it to her nearly three decades of experience in aerospace procurement and manufacturing at United Technologies Corporation.

“When (procurement organizations) do not know what is going to happen with supplier input prices, their lives are not very fun,” said Spence, the 2020 recipient of the J. Shipman Gold Medal Award, presented by ISM for career achievement.

“They get pinged a number of times from the CEO or the CFO about what is going to happen because they have to project revenue and profit and have to understand what is happening with costs. And the uncertainty makes it worse.”

The Report On Business® roundup:

Bloomberg: U.S. Manufacturing Activity Contracts for a Third Month. “The confusion over evolving trade policy is also making it difficult on supply managers to efficiently source goods and materials. The (Supplier Deliveries Index) climbed to the highest level since June 2022, indicating extended delivery times. The report also showed the fallout on demand from higher duties. Bookings contracted for a fourth month, and order backlogs shrank at the slowest pace since September 2022.”

CNBC: ISM Manufacturing PMI® Contracts for a Third Straight Month. “The (Prices Index) of 69.4 percent is sequentially lower than 69.8 percent (in April),” analyst Rick Santelli said. But that means we’ve had four (straight) prices paid readings that are above 60 percent, which is a pretty powerful level, and when you look at interest rates, pay attention to that.”

MarketWatch: U.S. Manufacturers Get Little Relief From Relaxed Trump Tariffs — ‘What Happens in 90 Days?’ “The implosion in imports and exports was no surprise: Massive U.S. tariffs basically froze trade last month as prices rose to prohibitive levels. New orders, production and employment all declined.  The economy appears to have picked up the pace since the tariffs were relaxed. … The chance of a recession has also declined.”

Reuters: U.S. Manufacturing Remains Subdued in May; Delivery Times Lengthening. “Economists polled by Reuters had forecast the PMI® rising to 49.3 percent. The survey suggested manufacturing, which is heavily reliant on imported raw materials, had not benefited from the de-escalation in trade tensions between President Donald Trump’s administration and China. Economists say the on-gain, off-again manner in which the import duties are being implemented is making it difficult for businesses to plan ahead.”

The Wall Street Journal: U.S. Factory Activity Slips Further as Trade Policies Weigh, ISM Says. “Excluding the pandemic period, new export orders were at their lowest reading since 2009. The survey’s measure of imports sank sharply for a second straight month. Price growth remained high, though moderated compared with April, while the survey’s production index increased from an alarmingly low reading in the prior month, Spence said.”

ISM’s Services PMI® will be unveiled on Wednesday, and the Hospital PMI® on Friday. For the most up-to-date content on the reports under the ISM® Report On Business® umbrella, use #ISMPMI on X, formerly known as Twitter.

(Photo credit: Getty Images/Serts)

About the Author

Dan Zeiger

About the Author

Dan Zeiger is Senior Copy Editor/Writer for Inside Supply Management® magazine, covering topics, trends and issues relating to supply chain management.