The Institute for Supply Management's closely watched purchasing managers' index hit 54 in May, marking the highest reading in four years and suggesting the worst of the U.S. manufacturing slump may finally be over. New orders, production, and backlogs all strengthened during the month, with activity expanding for a fifth consecutive month after roughly two years of contraction.
The data has energized White House officials. Peter Navarro, President Trump's senior counselor for trade and manufacturing, called the ISM number "the opening bell" rather than a finish line, signaling confidence in the sector's trajectory. Additional regional surveys from the Richmond and New York Federal Reserve districts reinforced the picture, showing stronger orders and shipments, while S&P Global's U.S. manufacturing PMI also climbed to a four-year high.
Yet beneath these headlines sits a more complicated reality. Survey respondents reported "extreme uncertainty" stemming from the Iran conflict, surging fuel costs, and ongoing supply chain disruptions. One electrical equipment manufacturer warned that "panic is starting within our industry" as customers refuse to absorb higher prices. Input costs remain elevated, with ISM's prices-paid gauge hovering near its highest levels since the 2021-2022 inflation surge.
Economists cautious about the strength of the rebound point to a critical detail: much of the recent activity appears driven by precautionary stockpiling rather than genuine demand. Companies are racing to build inventory and secure parts ahead of potential Iran-related supply disruptions, a dynamic that inflates current order books but may not reflect sustained economic momentum. S&P Global chief business economist Chris Williamson cautioned that "lift the hood, and the picture is not so clear." He noted that stockpiling was widespread in May and warned that "growth will cool once this stock build has run its course."
The disconnect between survey confidence and tangible economic metrics poses another problem for the administration. Factory output has improved in recent months but remains close to levels from several years ago. More troubling, factory payrolls have contracted in 12 of the past 15 months, undercutting a core campaign promise to revive blue-collar manufacturing jobs. If the manufacturing sector were truly booming, economists would expect to see this reflected in sustained employment gains and broader output measures, not just in sentiment surveys.
The manufacturing rebound may prove real, but current data suggests caution is warranted about its durability and breadth.
Author James Rodriguez: "Survey strength is no substitute for the jobs and output that actually matter to factory workers and their communities."
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