US ISM Manufacturing PMI edged down to 48.5 in May from 48.7, falling short of expectations and marking the lowest reading since November. This marks the third straight month of contraction, with underlying components still signaling broad-based weakness.
New orders and production remained in negative territory, at 47.6 and 45.4 respectively, suggesting that demand conditions are still under pressure. Employment also stayed weak at 46.8, contracting for a fourth straight month.
Prices Index slipped marginally to 69.4 from 69.8, but remains elevated. Over the last six months, price pressures have surged by over 19 points, bringing the index to its highest readings since mid-2022.
The external sector delivered particularly concerning signals, with new export orders plunging to 40.1, the lowest level since the pandemic and, excluding COVID-19, the weakest since the Great Recession. Imports also collapsed, down sharply to 39.9.
Despite the weak headline number, ISM noted that the PMI reading still corresponds to roughly +1.7% real GDP growth on an annualized basis.
