US ISM Manufacturing PMI (May) 48.5 vs. Exp. 49.5 (Prev. 48.7)

• The past relationship between the Manufacturing PMI and the overall economy indicates that the May reading (48.5 percent) corresponds to a change of plus-1.7 percent in real gross domestic product (GDP) on an annualized basis (vs 1.8% in April).

Respondents

• “There is continued softening of demand in the commercial vehicle market, primarily related to higher prices and economic uncertainty. The impact of ever-changing trade policies of the current administration has wreaked havoc on suppliers’ ability to react and remain profitable. Vehicle manufacturers have already rolled price increases into their products to protect their bottom lines but have not been as cooperative with their supply bases. This has resulted in a high occurrence of suppliers falling into financial distress.” [Transportation Equipment]


• “Tariffs, avian influenza and broader commodity markets continue to impact business conditions. The volatility of all three makes business planning and overall conditions challenging.” [Food, Beverage & Tobacco Products]


• “Government spending cuts or delays, as well as tariffs, are raising hell with businesses. No one is willing to take on inventory risk.” [Computer & Electronic Products]


• “Most suppliers are passing through tariffs at full value to us. The position being communicated is that the supplier considers it a tax, and taxes always get passed through to the customer. Very few are absorbing any portion of the tariffs.” [Chemical Products]


• “Tariff uncertainty is impacting new international orders. Tariffs are also the main reason our Asia customers are requesting delayed shipments.” [Fabricated Metal Products]


• “There is continued uncertainty regarding market reaction to the recently imposed tariffs and resulting actions by other countries. The rare earth restrictions being imposed are of high concern in the near term.” [Machinery]


• “The administration’s tariffs alone have created supply chain disruptions rivaling that of COVID-19.” [Electrical Equipment, Appliances & Components]


• “We have entered the waiting portion of the wait and see, it seems. Business activity is slower and smaller this month. Chaos does not bode well for anyone, especially when it impacts pricing.” [Primary Metals]


• “Tariff whiplash continues while the easing of tariff rates between the U.S. and China in May was welcome news, the question is what happens in 90 days. We are doing extensive work to make contingency plans, which is hugely distracting from strategic work, plus it is also very hard to know what plans we should actually implement. The 10-percent tariff on other countries is impactful as well, and it is unclear if/when deals will be made.” [Miscellaneous Manufacturing]


• “Uncertainty due to the recent tariffs continue to weigh on profitability and service. An unresolved (trade deal with) China will result in empty shelves at retail for many do-it-yourself and professional goods.” [Paper Products]

02 Jun 2025 - 15:00- ForexData- Source: Reuters