May 2021 Manufacturing ISM Report On Business Indicates Strong Sector Expansion Continues

By Steve Clouther

Industry Trends

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector grew in May, with the overall economy notching an 12th consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

May 2021 Manufacturing ISM ReportManufacturing grew in May, as the Manufacturing PMI registered 61.2 percent, 0.5 percentage point higher than the April reading of 60.7 percent. The Manufacturing PMI continued to indicate strong sector expansion and U.S. economic growth in May.

ISM’s New Orders Index registered 67 percent in May, up 2.7 percentage points compared to the 64.3 percent reported in April. This indicates that new orders grew for the 12th consecutive month.

The Production Index registered 58.5 percent in May, 4 percentage points lower than the April reading of 62.5 percent, indicating growth for the 12th consecutive month.

ISM’s Employment Index registered 50.9 percent in May, 4.2 percentage points lower than the April reading of 55.1 percent. The Employment Index grew for the sixth month in a row.

The delivery performance of suppliers to manufacturing organizations was slower in May, as the Supplier Deliveries Index registered 78.8 percent. This is 3.8 percentage points higher than the 75 percent reported in April and the highest reading since April 1974, when the index registered 82.1 percent.

The Inventories Index registered 50.8 percent in May, 4.3 percentage points higher than the 46.5 percent reported for April. The Inventories Index moved back into growth territory after contracting for one month.

ISM’s Backlog of Orders Index registered 70.6 percent in May, a 2.4-percentage point increase compared to the 68.2 percent reported in April, indicating order backlogs expanded for the 11th straight month. May’s reading is the highest since reporting for this subindex began in January 1993.

Sixteen of 18 manufacturing industries reported growth in May, in the following order: Furniture & Related Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Textile Mills; Primary Metals; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Fabricated Metal Products; Food, Beverage & Tobacco Products; Machinery; Chemical Products; Miscellaneous Manufacturing; Transportation Equipment; Wood Products; Paper Products; and Petroleum & Coal Products. The only industry reporting contraction in May is Printing & Related Support Activities.

Engage with ARC Advisory Group