Economic activity in the US manufacturing sector continued to contract in May as imports tumbled to their lowest level since 2009, according to the latest data from the Institute for Supply Management (ISM).
The ISM’s manufacturing Purchasing Managers’ Index (PMI) registered a reading of 48.5 in May, down from April’s reading of 48.7. This marks the sector’s continued contraction, with readings below 50 indicating a decline in activity. The import index also saw a significant drop to 39.9, reflecting a sharp decrease from April’s reading of 47.1.
The decline in imports can be attributed to the impact of President Trump’s tariff hikes on various countries. While some tariffs have been scaled back, many levies remain in place, leading to reduced demand and increased pricing pressures on businesses. Susan Spence, chair of the ISM Manufacturing Business Survey Committee, noted that imports continue to contract due to reduced demand and tariff pricing.
In an interview with Yahoo Finance, Spence highlighted that tariffs were a major concern among ISM panelists, with 86% of respondents mentioning levies in their comments. Some respondents even compared the current operating environment to the challenges faced during the pandemic in 2020. Spence emphasized the importance of certainty in trade policies to alleviate the industry’s struggles.
Meanwhile, a separate reading on manufacturing activity from S&P Global showed a slight improvement, with a reading of 52 in May, up from 50.2 in the previous month. However, S&P Global chief business economist Chris Williamson cautioned that the headline data masks underlying issues in the sector. While new orders and inventory levels increased, concerns about supply chain disruptions and rising prices were prevalent.
Overall, the data from both ISM and S&P Global point to ongoing challenges in the US manufacturing sector, exacerbated by trade uncertainties and pricing pressures. As businesses navigate these hurdles, it will be crucial for policymakers to provide clarity and stability in trade policies to support industry growth and resilience.
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