Tariff uncertainties keep US manufacturing sector in prolonged contraction

WASHINGTON: Economic activity in the U.S. manufacturing sector continued to contract in May amid uncertainties surrounding President Donald Trump's tariff policies, with the Manufacturing Purchasing Managers' Index (PMI) standing at 48.5 percent, according to data released Monday by the Institute for Supply Management (ISM).

AI Brief

May marked the third straight month of contraction, with the index falling below 50%.
Tariffs and government spending delays are hurting US businesses.
CEO confidence hit a 50-year low, with 83% predicting a recession soon.

This marked the third straight month of contraction, with May's reading dipping slightly below April's 48.7 percent. A reading under 50 percent signals a general contraction in the manufacturing sector.

According to the ISM, government spending cuts or delays, along with tariffs, have caused serious disruptions to U.S. businesses.

In addition, the Conference Board Measure of CEO Confidence, a barometer of the health of the U.S. economy from the perspective of chief executives, fell sharply to 34 in the second quarter of 2025, the largest quarter-on-quarter decline in almost 50 years.

Latest data from the Conference Board also showed that 83 percent of business leaders are expecting a recession in the next 12 to 18 months.