ISM Manufacturing PMI — May 2025
Headline: The Manufacturing PMI fell 0.2 point to 48.5, indicating contraction for a third consecutive month. The reading was below the prior six-month average of 49.4, though within the 48.4–50.9 range and just above its six-month low. Manufacturing remained below the 50.0 breakeven, while the broader economy was still growing relative to its 42.3 breakeven.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo |
|---|---|---|---|---|---|
| New Orders | 47.6 | 47.2 | +0.4 | Contracting | below avg (49.8) |
| Production | 45.4 | 44.0 | +1.4 | Contracting | below avg (48.8) |
| Employment | 46.8 | 46.5 | +0.3 | Contracting | below avg (47.1) |
| Supplier Deliveries | 56.1 | 55.2 | +0.9 | Slowing | 6-mo high |
| Inventories | 46.7 | 50.8 | -4.1 | Contracting | below avg (49.4) |
| Customers' Inventories | 44.5 | 46.2 | -1.7 | Too Low | 6-mo low |
| Prices | 69.4 | 69.8 | -0.4 | Increasing | above avg (59.9) |
| Backlog of Orders | 47.1 | 43.7 | +3.4 | Contracting | 6-mo high |
| New Export Orders | 40.1 | 43.1 | -3.0 | Contracting | 6-mo low |
| Imports | 39.9 | 47.1 | -7.2 | Contracting | 6-mo low |
Key moves:
- Imports dropped 7.2 points to 39.9, while New Export Orders fell 3.0 points to 40.1; both reached six-month lows.
- Customers’ Inventories fell to a six-month low of 44.5, while Backlog of Orders rose to a six-month high of 47.1—although both remain below 50.
- Inventories crossed from growth to contraction, falling 4.1 points to 46.7; Supplier Deliveries reached a six-month high of 56.1.
Insights:
- The modest improvement in New Orders, Production and Employment does not change their contractionary levels: all remain below 50. This is a clear change-versus-direction divergence, with activity declining more slowly rather than expanding.
- The 4.1-point decline in manufacturers’ Inventories, alongside New Orders at 47.6, points to leaner or cautious inventory management rather than deliberate stocking for strong demand. The positive New Orders-versus-Inventories spread is modest, while both measures remain below their six-month averages.
- Customers’ Inventories at 44.5—a six-month low—are “too low” and therefore supportive of future reordering and production. That positive pipeline signal is tempered by New Export Orders at 40.1 and Imports at 39.9, both six-month lows.
- Backlog improved to 47.1, its six-month high, but remained in contraction for a 32nd month. It may provide some near-term production support, but the persistently sub-50 level and weak new/export orders limit evidence of a durable manufacturing upturn.
- Supplier Deliveries at 56.1, a six-month high, indicate slower deliveries—consistent with supply tightness or stronger demand in parts of the system. Prices remained elevated at 69.4, well above their six-month average of 59.9, implying continued input-cost and goods-inflation pressure despite the slight monthly easing.
Breadth & prices: Seven industries reported growth and none were listed as contracting. Input prices continued to increase, with the