The latest data from the Institute for Supply Management (ISM) in the United States shows that the manufacturing PMI dropped to 48.5 in May, contracting for the third consecutive month, indicating that the industry continues to be under pressure. The tariff policy of the Trump administration has become a major concern for enterprises. Suppliers are passing on costs to customers, leading to supply chain delays and rising input costs. Some industries may face the risk of commodity shortages.
Manufacturers of transportation equipment, electronic products and machinery have all complained that tariffs have disrupted supply chains and squeezed profits. Although car manufacturers have protected themselves by raising prices, suppliers are in financial difficulties. Chemical product manufacturers pointed out that the cost of tariffs was “almost entirely passed on to customers”, intensifying inflationary pressure.
The supplier delivery index rose to 56.1, the highest since 2022, reflecting a significant slowdown in delivery speed due to tarive-related bottlenecks. The import index plummeted to 39.9, hitting a new low since 2009, and the volume of port freight declined simultaneously. Economists warn that the reduction in inventory may push up future prices.
Seven manufacturing sectors achieved growth, but seven industries such as transportation equipment and chemicals contracted. Recent controversial court rulings on tariffs have further increased the difficulty for enterprises to plan. Wells Fargo pointed out that enterprises are waiting and watching the policy direction, delaying investment and recruitment, which has led to the continuous slump of the employment sub-index (46.8).
Tariffs have affected the construction industry, with single-family home spending dropping by 1.1% in April. Oxford Economics believes that the outlook for manufacturing is “pessimistic”, and weak demand and cost pressures will continue to restrain the recovery.
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