Manufacturing Sector Expansion Hits 4-Year High, ISM, S&P Surveys Show

12:44 PM EDT, 06/01/2026 (MT Newswires) -- The US manufacturing sector expanded to its highest level in four years last month amid strength in demand and production, though price pressures remained elevated, two separate surveys showed Monday.

The Institute for Supply Management's purchasing managers' index increased to 54 in May from 52.7 the month prior, reaching its highest reading since May 2022. The consensus was for a 53 reading in a survey compiled by Bloomberg. A reading above 50 indicates the manufacturing sector is generally expanding.

The ISM survey indicates "a meaningful improvement in underlying manufacturing momentum, with the broad-based pickup in new orders, production and trade flows signaling firmer demand conditions both domestically and externally," TD Economics Senior Economist Vikram Rai said in a note. "The rise in the headline PMI to a multiyear high, alongside gains in backlogs and inventories and a smaller share of activity in contraction, suggests that the sector is transitioning from a fragile recovery to a more durable expansion phase."

The new orders index rose to 56.8 from 54.1 sequentially in May, while production improved to 54.3 from 53.4. The employment measure increased to 48.6 from 46.4, but remained in contraction for the 32nd straight month. The prices gauge fell to 82.1 from 84.6, indicating raw materials prices rose for a 20th consecutive month, the ISM survey showed.

"Even with improving activity, the persistence of elevated cost pressures is likely to constrain the pace of expansion and keep policymakers cautious, limiting the scope for near-term monetary-policy easing," Rai said.

Markets widely expect the Federal Reserve to keep its benchmark lending rate unchanged later this month, which would mark its fourth straight pause, according to the CME FedWatch tool.

Separately, S&P Global (SPGI) said Monday its manufacturing PMI advanced to 55.1 last month from 54.5 in April, also representing the highest print since May 2022. New orders "increased markedly," while output and sales were partly driven by stock building as firms looked to mitigate supply chain disruptions and elevated prices amid the ongoing Middle East conflict, the data provider said.

"The headline PMI has hit a four-year high, with strong factory production growth for a second successive month in response to a further marked upturn in order books," S&P Global Market Intelligence Chief Business Economist Chris Williamson said. "But since the outbreak of war in the Middle East, we have seen production and demand buoyed by stock building as companies worry over rising prices and supply difficulties."

Input costs increased at a rate "unmatched" in almost four years, while supplier delivery times deteriorated to "the greatest extent" since August 2022, S&P said.

"Stockpiling was again widely evident in May and makes it hard to take an accurate reading on the underlying health of the manufacturing economy," Williamson said. "The resulting steep jump in producer costs sends a worrying signal that broader economy inflation has further to rise in the coming months."

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