ISM: U.S. Manufacturing Activity Continues Downtrend

Providing insights into the ever-changing landscape of the industrial marketplace

Released June 6, 2023

Researched by Industrial Info Resources (Sugar Land, Texas)--Manufacturing activity in the U.S. contracted once again in May, according to a survey by the Institute for Supply Management (ISM), continuing a downtrend that began in June of last year. Still, Industrial Info's project data shows U.S. manufacturing project activity remains robust.

The ISM's May Purchasing Managers Index (PMI), which tracks 18 industry sectors in the U.S., registered 46.9%--down from 47.1% in April, 47.7% in February, 48.4% in December 2022, and a 12-month high of 53.1% in June 2022. Any reading under 50% indicates contraction in the manufacturing economy.

"This is the seventh month of contraction and continuation of a downward trend that began in June 2022," Timothy Fiore, chair of the ISM's Manufacturing Business Survey Committee, said. "That trend is reflected in the Manufacturing PMI's 12-month average falling to 49.4 percent."

Although May's PMI reading is just 0.2 percentage points lower than April's, "there is clearly more business uncertainty in May," Fiore said. Demand eased again, with the New Orders Index contracting at a faster rate than last month, the Customers' Inventories Index at a level that indicates "a negative for future production," and the Backlog of Orders Index dropping to a level not seen since the Great Recession in 2008.

"New order rates contracted further, as panelists remain concerned about when manufacturing growth will resume. Panelists' comments again registered a 1-to-1 ratio regarding optimism for future growth and continuing near-term demand declines," Fiore said. He added only one of the six biggest manufacturing industries (Transportation Equipment) registered growth in May.

Despite the downtrend in manufacturing activity, Industrial Info is tracking $74 billion worth of U.S. Industrial Manufacturing Industry projects set to begin construction in the third quarter. The following sectors account for nearly $63 billion of the spend: semiconductors & computers ($27.2 billion); automotive ($13.8 billion); transportation systems ($11.4 billion); and data centers ($10.1 billion).

AttachmentClick on the image at right for a breakdown of U.S. Industrial Manufacturing Industry projects set to kick off in the third quarter, by the top four sectors.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for a full list of projects.

Companies in the U.S. are aiming to ease the domestic semiconductor shortage and boost onshore production, and GlobalFoundries Incorporated's (Malta, New York) $10 billion expansion of its semiconductor plant in Malta, is expected to kick off in July. The project entails adding nine buildings totaling 633,000 square feet to the existing 950,000-square-foot manufacturing plant. Subscribers can click here for the project report.

The automotive sector's activity is buoyed by electric vehicle (EV) and EV-battery projects, including General Motors Company's (NYSE:GM) (GM) (Detroit, Michigan) $4.1 billion battery pack module assembly line addition at its facility in Lake Orion, Michigan. The line will allow GM to manufacture battery cells, modules and packs for EVs, including the upcoming GMC Hummer EV pickup. Construction is expected to wrap up in 2024. Subscribers can click here for more information.

Meanwhile, Vietnamese automaker VinFast plans to begin the first phase of its first EV and battery production factory in the U.S., in Moncure, North Carolina. The $2 billion first phase would produce 150,000 vehicles (electric cars and buses) per year, with completion expected in July 2024; a plant expansion to increase manufacturing capacity would kick off in fourth-quarter 2024. Subscribers can see detailed reports on the manufacturing plant and expansion projects.

In terms of data center projects, Google parent company Alphabet Incorporated (NASDAQ:GOOGL) (Mountain View, California) plans to begin construction on six projects worth $2.2 billion, including the $600 million Phase I of its development in Kansas City, Missouri, known as "Project Shale." Phase I entails constructing a data center building of up to 1 million square feet to help meet regional demand for Google services, and completion is expected early next year. Meanwhile, a $500 million expansion of its data center in Red Oak, Texas, entails constructing a third building to expand services in the Dallas area. Subscribers can read more information on the Kansas City and Red Oak projects.

Subscribers to the GMI project and plant databases can click here for a look at all of the projects discussed in this article and here for the plant profiles.

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).

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