US May Manufacturing PMI at 55.1 Misses Forecast; Tariffs, Iran Uncertainty Weigh

S&P Global’s manufacturing Purchasing Managers’ Index came in slightly below market expectations in May. The gauge remained in expansion territory, but tariffs and uncertainty tied to the Iran war are clouding the sector’s outlook.

Investing.com reported on June 1 that the US manufacturing PMI was 55.1 for May, just below the market forecast of 55.3. The reading was still up from 54.5 in the previous month.

The PMI tracks activity among manufacturing purchasing managers. A reading above 50 generally signals expansion, while one below 50 indicates contraction. Although the latest figure missed forecasts, it still pointed to continued growth in manufacturing activity.

Paul Smith, economics director at S&P Global Market Intelligence, said the manufacturing sector posted solid expansion in May as output and new orders increased further and employment growth was the strongest since October 2024.

Smith was more cautious about the quality of that growth. Companies reported broader demand improvement and success in winning new customers. Still, evidence continued to show that tariffs and uncertainty stemming from the Iran war were weighing on product markets.

He also said inventory building may have helped lift the data. In his view, the improvement in sector performance was likely driven by customers trying to secure goods in advance amid rising prices and concerns over product availability.

Manufacturers, meanwhile, are building buffer inventories as they prepare for future inflation and supply-chain fragility. Smith added that May’s survey already showed a marked rise in operating costs and longer supplier delivery times.

“That leads to the rather gloomy conclusion that current growth is somewhat illusory and carries downside risks,” Smith said. Confidence in the business outlook among manufacturers also weakened in May and remained below the long-term average.