Manufacturing ISM in May Stronger Than Expected as New Orders Rise

The May ISM Manufacturing Index came in at 56.1% over the consensus 54.9% from 55.4% in April. Of note was the Prices Index falling to 68.2% from 82.4%. May marked the 24th consecutive month of expansion in the manufacturing sector. However, this May reading was the second lowest since September 2020. Price pressures mellowed, though still elevated. Prices Index dropped to 82.2% from 84.6%.

The hope is improved supply chain conditions; the question is does the Ukraine Russian war not allow for any gains.

US manufacturing Workers
ISM Manufacturing May 2022

A number above 50.0% is indicative of expansion. 

“All of the six biggest manufacturing industries — Machinery; Computer & Electronic Products; Food, Beverage & Tobacco Products; Transportation Equipment; Petroleum & Coal Products; and Chemical Products — registered moderate-to-strong growth in May.”

A standout from the report is that manufacturing activity picked up in May despite the rampant inflation and ongoing supply chain problems. Sentiment regarding demand remained strongly optimistic with hope that things improve sooner than later.

“The U.S. manufacturing sector remains in a demand-driven, supply chain-constrained environment. Despite the Employment Index contracting in May, companies improved their progress on addressing moderate-term labor shortages at all tiers of the supply chain, according to Business Survey Committee respondents’ comments. Panelists reported slightly lower rates of quits compared to April. May was a second straight month of slight easing of prices expansion, but instability in global energy markets continues. Surcharge increase activity appears to be stabilizing across all industry sectors. Sentiment remained strongly optimistic regarding demand, with five positive growth comments for every cautious comment. Panelists continue to note supply chain and pricing issues as their biggest concerns.

Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

May ISM 2022 Highlights

  • The New Orders Index rose to 55.1% from 53.5%.
  • The Prices Index dropped to 82.2% from 84.6%.
  • The Backlog of Orders Index increased to 58.7% from 56.0%.
  • The Supplier Deliveries Index dropped to 65.7% from 67.2%.
  • The Production Index increased to 54.2% from 53.6%.
  • The New Export Orders Index edged up to 52.9% from 52.7%.
  • The Employment Index fell to 49.6% from 50.9%.
  • Demand expanded, with the New Orders Index improving, supported by stronger growth of new export orders,
  • Customers’ Inventories Index remaining at a very low level
  • Backlog of Orders Index increasing.
  • Consumption (measured by the Production and Employment indexes) was mixed during the period, with a combined minus-0.7-percentage point change to the Manufacturing PMI® calculation.
  • The Employment Index contracted after expanding for eight straight months, but panelists indicated improvement in ability to hire in May compared to April.
  • Challenges with turnover (quits and retirements) and resulting backfilling continue to plague efforts to adequately staff organizations, but to a slightly lesser extent compared to April. Inputs — expressed as supplier deliveries, inventories and imports — continued to constrain production expansion
  • The Supplier Deliveries Index indicated deliveries slowed at a slower rate, which was supported by the Inventories Index increase in May.
  • The Imports Index contracted in May after six consecutive months of expansion, reflecting the impact of COVID-19 lockdowns in China.
  • The Prices Index increased for the 24th consecutive month, at a slower rate compared to April.


  • “Suppliers are seeing a light at the end of the tunnel for restoration of (semiconductor) component supply. Second-quarter and Q3 supply appears to be loosening.” [Computer & Electronic Products]
  • “While orders remain strong and backlogs exist, there’s a softening in forecasted orders for leading indicator-type customers and business units.” [Chemical Products]
  • “The challenge with semiconductors hasn’t softened; the situation is worsening due to Chinese COVID-19 lockdowns.” [Transportation Equipment]
  • “Input costs, particularly grain, oil, dairy and protein, are rising faster than can be passed along at retail and food service, with no relief in sight.” [Food, Beverage & Tobacco Products]
  • “Our order books are still strong. Material prices continue to rise, with energy and freight noted as the underlying influences on increased costs.” [Machinery]
  • “Shanghai has been shut down since mid-March. All of the (population) is in lockdown, with no production or port activities. Steel remains in allocation. Electronics lead times are more than 12 months.” [Fabricated Metal Products]
  • “Supply chain issues are causing us to dramatically extend our lead times. Our production lines have (run) low on or out of parts needed to complete rates every week this month.” [Miscellaneous Manufacturing]
  • “We’ve continued to transition to North American sales to avoid ocean vessels, and we are apprehensive about the West Coast ports’ labor contract negotiations. A challenge of doing more business by rail is the backlog of rail cars and embargos.” [Paper Products]
  • “Price increases haven’t let up. I thought 2022 was going to be better, but it hasn’t been. Shortages (among other issues) are still disrupting the supply chain.” [Plastics & Rubber Products]
  • “Business is steady. We consolidated shifts and do maintenance on off hours, which is working well.” [Primary Metals]

Source: ISM ISMWorld

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