The Institute for Supply Management (ISM) announced on Monday that the Manufacturing Purchasing Managers' Index (PMI) rose to 54 points in May, the highest level since May 2022, after reaching 52.7 points in April. This figure is higher than forecast, as analysts expect the index to be at 53 points.
In May, US manufacturing activity remained within the expansion zone, with a faster rate of increase than the previous month.
Among the 5 PMI sub-indices, the new order index showed faster growth than the previous month, the supplier delivery index remained unchanged, the manufacturing index increased faster, while the jobs and inventory index remained in a narrow range, although both improved" - Ms. Susan Spence, Chairman of the ISM Manufacturing Business Survey Committee, said.
The components in the report show an improved picture in key areas, with new orders, manufacturing and jobs all increasing compared to April, while prices cooled down.
The newly expanded order index for the fifth consecutive month after 4 consecutive months is in a narrow range, reaching 56.8%, up 2.7 percentage points compared to 54.1% in April" - Ms. Spence noted - "The manufacturing index in May reached 54.3%, 0.9 percentage points higher than 53.4% in April. The price index is still in an expanded range, meaning prices continue to increase, reaching 82.1%, down 2.5 percentage points compared to 84.6% in April. The inventory order index reached 52.2%, up 0.8 percentage points compared to 51.4% recorded in April. The job index reached 48.6%, up 2.2 percentage points compared to 46.4% in April.
Mr. Bill Adams - US Chief Economist at Fifth Third Commercial Bank - told Kitco News that the US economy this year is being affected by many negative pulling forces.
Of course, it's the Iran war, but there's also the artificial intelligence (AI) boom wave, the fiscal stimulus package passed last year, and the US Federal Reserve (Fed) interest rate cuts by the end of 2025," he said. "The net impact of these opposite pulling forces is that the economy continues to grow at a fairly good pace, but the distribution between sectors is uneven.
Mr. Adams believes that the manufacturing sector is actually benefiting from these factors. "Defense, aerospace and semiconductors are part of it," he noted.
“Besides, there is also demand for capital equipment, driven by the depreciation bonus clause in last year's tax and spending bills. In addition, the amount of business decisions delayed in 2025 due to tariff instability seems to be beginning to transform into procurement and production activities. On the contrary, the relative weakening of the construction sector is a major obstacle to the demand for construction materials.
Regarding the overall economic outlook, the ISM survey shows that the economy continues to expand in the second quarter, despite differentiation between beneficiaries and those facing difficulties," he said. "The economy seems to have grown at a fairly good pace in the first half of 2026. The slowdown in the first quarter mainly comes from the weak increase in business inventory, a drag that could turn into a supporting factor in the coming quarters.
If the Strait of Hormuz is opened in the next few days to weeks, as is currently reflected in the prices on the financial market, and the global energy supply disruption ends, the US economy may achieve another year of significant growth in 2026," Adam added.
