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US Manufacturing Activity Shrank in May for a Third Month

  • In May, U.S. manufacturing continued to shrink for the third month in a row, with the ISM manufacturing index declining to 48.5, marking a level below the neutral threshold of 50.
  • The contraction follows weak consumer spending in April and ongoing uncertainty caused by frequent tariff changes and unresolved trade deals, particularly with China, affecting suppliers and investment plans.
  • Seven manufacturing industries reported contraction led by paper products and wood, while seven others expanded, including plastics, rubber, and petroleum, amid the largest inventory contraction in four months.
  • Susan Spence stated that, despite current challenges, the economy remains in a phase of growth over the long term, and she expressed optimism that resolving tariff uncertainties will help ease the difficulties faced by suppliers.
  • The sustained manufacturing weakness and tariff-related uncertainty suggest continued softening demand and cautious business planning, while economist Stuart Paul noted low customer inventories could support future order increases.
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The manufacturing sector in the United States faces a worrying picture, with a contraction for the third consecutive month in May 2025, according to a recent manufacturing business report by the Institute of Supply Management (ISM). The manufacturing index (PMI) was a worrying 48.5%, a decline that reflects a declining manufacturing economy. This trend, marked by falls in production, employment and a drastic reduction in the order portfolio, und…

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FXStreet broke the news in on Monday, June 2, 2025.
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