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US manufacturing activity is sliding, and not the fun kind you do at playgrounds.
The purchasing managers index (PMI) fell for a third straight month in May, falling one-fifth of a percentage point from April to 48.5%, the Institute for Supply Management announced. May’s was the lowest index reading since November, and only one subindex—supplier deliveries—expanded, the ISM also noted.
“In May, US manufacturing activity slipped further into contraction after expanding only marginally in February,” Susan Spence, chair of the ISM’s manufacturing business survey committee, said in a news release. “Contraction in most of the indexes that measure demand and output have slowed, while inputs have started to weaken.”
Even so, the PMI remained above the 42.3% threshold that “generally indicates an expansion of the overall economy,” ISM noted.
Manufacturing demand was mixed, according to Spence, with customer inventories and new export orders contracting more quickly than new orders and order backlogs. Production rebounded a bit “from an alarmingly low reading” in April, but factory output contracted further last month. This shows that “companies are still revising production plans downward amid economic uncertainty,” she said.
Tariffs were a common refrain among respondents. For instance, a metal fabricator told the ISM that “tariff uncertainty is impacting new international orders,” adding that tariffs “are also the main reason our Asia customers are requesting delayed shipments.”