U.S. Manufacturing Activity Contracts for Third Month

TEMPE, Ariz., June 2, 2025 /PRNewswire/ — U.S. manufacturing activity contracted again in May, marking the third consecutive month of decline, according to the latest Manufacturing ISM® Report On Business® released today.

The Manufacturing Purchasing Managers’ Index (PMI) stood at 48.5%, down 0.2 percentage points from April’s 48.7%, indicating ongoing contraction in the sector. This decline follows a brief two-month expansion after 26 months of continuous contraction.

Susan Spence, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee, commented, “The Manufacturing PMI indicates the overall economy has continued in expansion for 61 months, despite slight contractions in specific sectors.”

The New Orders Index fell to 47.6%, a marginal increase from April’s 47.2%, while the Production Index improved to 45.4%, up from 44%. Both indexes, however, remain below the neutral 50% mark, reflecting decreased demand.

Prices continue to rise, with the Prices Index remaining in expansion at 69.4%, despite a slight decrease from April’s 69.8%. Suppliers reported delays in deliveries, reflected in the Supplier Deliveries Index, which rose to 56.1%.

The Employment Index registered 46.8%, a slight improvement from April’s 46.5%, indicating ongoing job cuts within the sector. Many firms are still facing uncertainty and balancing headcounts through layoffs rather than new hiring.

Spence highlighted that while two major sectors—Petroleum & Coal Products and Machinery—reported growth, the overall manufacturing landscape remains challenged, with many industries showing signs of contraction.

The Import Index plunged to 39.9%, revealing a drastic drop in imported goods as companies adjusted to reduced demand and tariff impacts. Similarly, the New Export Orders Index fell to 40.1%, indicating that export activity is also facing significant downturn.

The report reveals a clear challenge for U.S. manufacturers coping with fluctuating tariffs and international supply chain pressures, as they navigate a complex economic landscape.