U.S. Manufacturing Weakens Further in May Amid Prolonged Supply Delays and Tariff Woes

U.S. Manufacturing Weakens Further in May Amid Prolonged Supply Delays and Tariff Woes

The American manufacturing sector continued to shrink in May, marking its third consecutive month of contraction, as producers faced extended input delivery times due to ongoing tariff complications. According to the Institute for Supply Management (ISM), the manufacturing Purchasing Managers’ Index (PMI) dipped slightly to 48.5 in May from April’s 48.7 — its lowest point in six months. Any reading below 50 signals contraction in the sector, which contributes roughly 10.2% to the U.S. economy.

Despite this downturn, the PMI remains above 42.3 — the threshold the ISM uses to gauge broader economic expansion. However, expectations had been higher, with economists surveyed by Reuters projecting a rebound to 49.3. The data indicates that the sector, still heavily dependent on imported inputs, has yet to reap benefits from the recent easing of trade hostilities between Washington and Beijing.

Uncertainty continues to cloud business planning due to the unpredictable nature of tariff enforcement. Last week, a U.S. trade court blocked most of former President Donald Trump’s proposed tariffs, stating he exceeded his legal authority. Yet, a federal appeals court swiftly reversed the decision, temporarily reinstating them — adding further ambiguity for manufacturers.

The ISM’s supplier deliveries index rose to 56.1 from 55.2, pointing to longer wait times for goods. While slow deliveries are typically associated with robust demand, analysts believe the current delays stem more from trade-related supply disruptions than economic strength. In fact, previous ISM reports flagged port clearance backlogs and falling cargo volumes.

Import activity also shrank, with the ISM’s imports index dropping sharply to 39.9 from 47.1. Production levels remained weak, and only minimal gains were observed in new orders. The new orders sub-index ticked up slightly to 47.6 from 47.2, indicating still-sluggish demand.

Meanwhile, price pressures persisted. Manufacturers paid less for materials in May compared to April, but costs remained elevated, with the prices paid index easing marginally to 69.4 from 69.8 — a sign of continued stress in supply chains. Employment in the sector also showed no strong recovery, as companies preferred layoffs over natural attrition. The manufacturing jobs index inched up to 46.8 from 46.5, remaining firmly in contraction territory.

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