Source: Supply Chain Dive
Date: 1st June 2026 

Factory output and new orders continue to improve, although cost pressures and market uncertainty remain key concerns.

The U.S. manufacturing sector expanded for a fifth consecutive month in May, reaching its strongest level since May 2022, according to the latest Institute for Supply Management (ISM) Purchasing Managers’ Index (PMI).

The ISM Manufacturing PMI rose to 54.0%, up from 52.7% in April, signalling continued growth across the sector. The broader U.S. economy also extended its expansion streak to 19 consecutive months. A PMI reading above 50% indicates economic expansion.

A separate survey by S&P Global reported a manufacturing PMI reading of 55.1 in May, further reinforcing signs of strengthening industrial activity.

Growth was supported by rising new orders, improving production levels and stronger export demand. The New Orders Index increased to 56.8%, marking its fifth consecutive month of expansion, while the Production Index rose to 54.3%.

Demand indicators also improved. New Orders, Backlog of Orders and New Export Orders all remained in expansion territory during May. In addition, customer inventories continued to be reported as relatively low, which is generally viewed as a positive indicator for future manufacturing output.

Despite the positive momentum, manufacturers continue to face several challenges. Pricing volatility remains a major concern, with more than half of surveyed companies citing cost uncertainty as a key issue. Although the Prices Index eased slightly to 82.1%, it remains elevated, reflecting ongoing pressure from energy, transportation and raw material costs.

Supplier delivery performance also remained constrained, with the Supplier Deliveries Index holding at 60.6%, indicating longer lead times across supply chains.

Employment conditions showed signs of stabilisation. The Employment Index improved to 48.6%, although it remained slightly below expansion territory. Survey respondents were evenly split between maintaining workforce levels and actively hiring.

Several manufacturers reported that customers continue to place orders ahead of potential future cost increases, helping support demand in the near term. However, concerns remain over rising supply chain costs, shipping delays and ongoing market uncertainty.

Industry performance was broadly positive, with major sectors including machinery, transportation equipment, chemical products, petroleum products, food and beverage manufacturing, and computer and electronic products all reporting growth during the month.

While manufacturers remain cautious about future economic conditions, the latest PMI data suggests the sector continues to build momentum, supported by improving demand, healthier order books and gradual stabilisation across supply chains.

The latest PMI results suggest that manufacturing demand remains resilient despite ongoing cost pressures. Rising new orders and stronger production levels indicate that many manufacturers are seeing stable customer demand and improving business conditions.

However, pricing volatility, supply chain disruptions and procurement uncertainty continue to require careful planning and inventory management.

Growing manufacturing activity typically translates into increased freight demand across ocean, air, rail and trucking networks.

Higher production volumes may generate additional movement of raw materials, components and finished goods, supporting transportation demand in the months ahead. However, ongoing supplier delays and elevated input costs could continue to create planning challenges for shippers.

The continued expansion in manufacturing highlights the importance of supply chain visibility and flexibility.

Businesses will need to balance inventory levels, manage supplier performance and monitor transportation costs as production activity strengthens. Companies with diversified sourcing strategies and strong logistics partnerships will be better positioned to navigate ongoing market volatility.

The latest manufacturing data points to a sector that is gradually gaining momentum despite ongoing cost and supply chain challenges. While uncertainty remains, rising new orders, stronger production activity and improving export demand are encouraging signs for global trade and freight markets.

For supply chain leaders, the focus remains on maintaining agility, securing reliable capacity and strengthening visibility across increasingly complex manufacturing and logistics networks.