ISM: U.S. Manufacturing Activity Reaches Lowest Level Since November

Researched by Industrial Info Resources (Sugar Land, Texas)--The Institute of Supply Management's (ISM) Purchasing Managers Index (PMI), a leading indicator for the level of economic activity in U.S. manufacturing, reached its lowest figure since November as manufacturers feel the effects of tariffs.

The PMI, which tracks 18 industry sectors in the U.S., registered 48.5% in May, down marginally from 48.7% in April and a further reach from the 50.8% in March, 50.3% in February and 50.9% in January. Any reading under 50% indicates contraction in the manufacturing economy.

"The Manufacturing PMI decreased to its lowest reading since November, when it registered 48.4%," Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said in a related summary of findings. "Slower supplier deliveries have been driven by tariff concerns and advancing material deliveries; such shipments slowed or stopped after tariffs were deployed, leading to a drawdown of manufacturing inventories."

Spence said contraction in most of the indexes that measure demand and output (measured by the Production and Employment indexes) has slowed, while inputs have started to weaken.

Regarding demand, the New Orders and Backlog of Orders indexes contracted at slower rates, while the Customers' Inventories and New Export Orders indexes contracted more strongly.

The Production Index increased from an "alarmingly low reading the previous month," but factory output remained in contraction territory in May, "indicating that panelists' companies are still revising production plans downward amid economic uncertainty."

Regarding inputs, the Inventories Index entering contraction territory was to be expected considering companies proactively increased inventory levels before tariffs took effect, while the Supplier Deliveries Index reflected "ongoing delays in clearing goods through ports of entry."

Survey respondents expressed ways the tariffs were impacting operations. One from Electrical Equipment, Appliances & Components said, "The administration's tariffs alone have created supply chain disruptions rivaling that of COVID-19.

Another from Fabricated Metal Products said, "Tariff uncertainty is impacting new international orders. Tariffs are also the main reason our Asia customers are requesting delayed shipments," while one from Machinery said, "There is continued uncertainty regarding market reaction to the recently imposed tariffs and resulting actions by other countries."

Regarding manufacturing project spending, the National Association of Manufacturers' (NAM) recent outlook survey indicates that manufacturers feel tariffs pose the biggest threat to their capital expenditures. For more information, see June 3, 2025, article - Survey: Trade Uncertainties Loom Over U.S. Manufacturers' Capital Investments.

For more information on April's PMI, which also indicated tariffs are affecting manufacturing activity, see May 2, 2025, article - U.S. Manufacturing Activity Continues Contraction Amid Tariff Environment.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).