The ISM Manufacturing PMI rose to 54% last month, its highest since May 2022, even as the Iran war kept price pressures near multi-year highs
Spencer Platt / Getty Images
U.S. manufacturing expanded in May for the fifth consecutive month, with May's PMI of 54% the strongest print since May 2022 and representing a 1.3-percentage-point improvement over April's 52.7% reading, with gains in new orders and production driving the increase.
All six of the largest manufacturing industries expanded in May, ISM said. New orders grew for a fifth straight month, with the New Orders Index rising to 56.8%, while the Production Index reached 54.3% for its seventh consecutive month of expansion. Wood products was the lone holdout among the 17 industries ISM tracks, with all others recording expansion in May.
Despite the strong headline figure, cost pressures remained acute. The ISM Prices Index registered 82.1% in May — still near its highest level since 2022, even after easing 2.5 percentage points from April. ISM Manufacturing Business Survey Committee Chair Susan Spence said price increases continue to be driven by higher steel and aluminum costs, tariffs on imported goods, and petroleum-based product inflation tied to the Middle East conflict. No commodities were reported down in price in May.
According to Spence, sentiment in panelist comments skewed heavily pessimistic — 69% negative versus 25% positive. References to the Iran war appeared in 42% of all responses, while tariffs came up in 18%. Pricing volatility was identified as a direct operational concern by 57% of respondents. A respondent from the transportation equipment sector quoted in the ISM report warned that the Iran conflict was beginning to hit supply chain costs directly, with oil and related commodities rising sharply in price. A miscellaneous manufacturing respondent described "extreme uncertainty" over price stability and supply continuity tied to the Iran conflict and Strait of Hormuz closure.
At 60.6% for the second consecutive month, the Supplier Deliveries Index sat at a four-year peak, reflecting the ongoing strain that Middle East hostilities have placed on logistics networks across every tracked manufacturing sector.
At 48.6%, the Employment Index edged higher but remained below the 50% expansion threshold for a 32nd straight month, with roughly half of panelists indicating that workforce management — not hiring — continued to define their labor strategy.
The Iran war first appeared as a direct business impact in March ISM data, when panelists cited rising lead times, container delays, and shipping blockages linked to the Strait of Hormuz closure. The Prices Index has climbed nearly 12 percentage points since February, when it stood at 70.5%.
ISM said the May PMI reading corresponds to a 2.2% annualized increase in real GDP.
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