May 2024 Manufacturing ISM Report On Business Indicates Employment Expanded After Seven Consecutive Months of Contraction

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected. Economic activity in the manufacturing sector contracted in May for the second consecutive month and the 18th time in the last 19 months, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The U.S. manufacturing sector contracted for the second consecutive month in May, as the Manufacturing PMI registered 48.7 percent, down 0.5 percentage point compared to April’s reading of 49.2 percent. After breaking a 16-month streak of contraction by expanding in March, the manufacturing sector has contracted the last two months, and at a faster rate in May.

ISM’s New Orders Index contracted in May for the second month, registering 45.4 percent, a decrease of 3.7 percentage points compared to April’s figure of 49.1 percent and the lowest reading since May 2023 (42.9 percent). The New Orders Index hasn’t indicated consistent growth since a 24-month streak of expansion ended in May 2022.

The Production Index pulled back slightly, but remained in expansion territory in May, registering 50.2 percent, 1.1 percentage points lower than the April reading of 51.3 percent. The Production Index has been in expansion in four of the last five months.

ISM’s Employment Index registered 51.1 percent in May, 2.5 percentage points higher than the April reading of 48.6 percent. The index indicated employment expanded after seven consecutive months of contraction.

Delivery performance of suppliers to manufacturing organizations was faster in May, with the Supplier Deliveries Index registering 48.9 percent, the same reading reported in April. This is the third consecutive month of faster deliveries after one month of slower performance preceded by 16 straight months in “faster” territory.

The Inventories Index registered 47.9 percent in May, down 0.3 percentage point compared to the reading of 48.2 reported in April. Manufacturing inventories contracted at a slightly faster rate compared to the previous month.

ISM’s Backlog of Orders Index registered 42.4 percent, down 3 percentage points from the 45.4 percent reported in April, indicating order backlogs contracted for the 20th consecutive month after a 27-month period of expansion.

The seven manufacturing industries reporting growth in May — in order — are: Printing & Related Support Activities; Petroleum & Coal Products; Paper Products; Textile Mills; Primary Metals; Fabricated Metal Products; and Chemical Products. The seven industries reporting contraction in May — in the following order — are: Wood Products; Plastics & Rubber Products; Machinery; Computer & Electronic Products; Furniture & Related Products; Transportation Equipment; and Food, Beverage & Tobacco Products.