Manufacturing Activity Unexpectedly Slowed in May
Manufacturing activity in the U.S. decelerated more than expected in May, with the ISM Manufacturing PMI falling to 48.7%. This marks a 0.5 percentage point drop from April’s 49.2% and the lowest reading since February, according to the latest data from the Institute of Supply Management.
By the numbers:
- New Orders Index: Slumped to 45.4%, down from 49.1% in April, marking the lowest level since May 2023.
- Prices Index: Fell to 57%, a 3.9 percentage point decrease from April’s 60.9%, yet remains the second-highest level in the past 21 months.
What They’re Saying: “Demand remains elusive as companies demonstrate an unwillingness to invest due to current monetary policy and other conditions,” said Timothy R. Fiore, Chair of the Institute for Supply Management. “Suppliers continue to have capacity, with lead times improving and shortages not as severe.”
Market reaction: The 10-year yield fell 10 basis points as traders reacted to the slower-than-expected manufacturing data, reflecting concerns about the broader economic outlook.
The Big Picture: The contraction in the manufacturing sector signals broader economic challenges, with persistent hesitancy from companies to commit to new investments. Despite improved supplier capacity and reduced lead times, the lack of demand is hindering recovery.
