TEMPE, Ariz. – The U.S. manufacturing sector contracted in May for the second consecutive month and for the 18th time in the past 19 months, according to the Institute for Supply Management in its latest report. The monthly index recorded a 48.7%, down half a percentage point from last month.
“U.S. manufacturing activity continued in contraction after growing in March, the first expansion for the sector since September 2022,” said Timothy R. Fiore, ISM chairman. “Demand was soft again, output was stable, and inputs stayed accommodative. Demand slowing was reflected by new orders dropping deeper into contraction, supported by additional comments regarding ‘softening.’
Production levels remained stagnant from April, while headcount reductions continued.
“Demand remains elusive as companies demonstrate an unwillingness to invest due to current monetary policy and other conditions,” Fiore continued. “These investments include supplier order commitments, inventory building and capital expenditures. Production execution continued to expand but was essentially flat compared to the previous month. Suppliers continue to have capacity, with lead times improving and shortages not as severe.”
Of the 18 manufacturing industries recognized by the ISM, seven reported growth, and seven reported contraction. Four reported no change.
Furniture was among those to report a contraction, although it appears to be less severe than in previous months. Just as in April, furniture saw no change in production output and new orders. Both had fallen in March.
Furniture was one of six to report a decline in employment, which was also seen in April. It saw no change in the speed of supplier deliveries. It reported lower inventories for the month and saw no change in the prices of raw materials. Finally, it was one of nine to report lower backlogs.
Last month, ISM released its semi-annual report, which indicated that in 2024 compared to 2023, though less so than they were when surveyed at the end of 2022.