Input Stories

The S&P Global U.S. Manufacturing PMI was 52.0 in May, the fifth consecutive month of growth and up from 50.2 in April. PMI growth was led by a rise in new orders and a dramatic increase in input inventories, which rose at a pace not seen in the indicator’s 18-year history even amid higher prices. Domestic demand was the primary driver to new order growth, along with efforts to frontload production ahead of greater tariff impacts. Additionally, optimism increased slightly after falling sharply in April, and employment advanced for the first time in three months. On the other hand, production declined for the third month in a row and at a slightly faster pace than in April.

Tariffs led to steep increases in both input and output costs, which rose at the highest rate since November 2022. Raw material prices remained elevated, despite dropping to a three-month low, amid reports of manufacturers passing on higher tariff-related costs. Additionally, tariffs continue to cause supply-side disruptions, as supplier delays have risen to the highest degree since October 2022 and are leading to growing vendor shortages. Small manufacturers and those in consumer-facing markets seem to be hit most severely by the impact of tariffs on prices and supply.

Nevertheless, manufacturers felt more optimistic that economic conditions will be more stable in a year’s time, particularly expecting tariff disruptions to dissipate in the months ahead. Therefore, confidence reached a three-month high to right above the survey average.