The Institute for Supply Management’s monthly Purchasing Managers Index (PMI) — a well-regarded barometer of the U.S. industrial economy — fell slightly in May, according to data released by ISM June 1.

The ISM PMI registered at 46.9% in May, down from 47.1% in April. The May PMI mark remains in contraction territory (anything below 50%) for a seventh straight month. A November PMI mark of 49 snapped 29 straight months of expansion (any reading of 50% or higher).

“The U.S. manufacturing sector shrank again, with the Manufacturing PMI^® losing a bit of ground compared to the previous month, indicating a faster rate of contraction,” ISM Manufacturing Business Survey Committee Chair Timothy Fiore said in a news release. “The May composite index reading reflects companies continuing to manage outputs to better match demand for the first half of 2023 and prepare for growth in the late summer/early fall period. However, there is clearly more business uncertainty in May.”

Fiore noted that, of the six biggest manufacturing industries, only one — transportation equipment — registered growth in May. Of the 18 industries ISM tracks, three others — nonmetallic mineral products, furniture & related products, and fabricated metal products — reported growth. The other 14 industries reported contraction in May.

“New order rates contracted further, as panelists remain concerned about when manufacturing growth will resume,” Fiore said. “Panelists’ comments again registered a 1-to-1 ratio regarding optimism for future growth and continuing near-term demand declines. Supply chains are prepared and eager for growth, as panelists’ comments and the data support reduced lead times for their companies’ more important purchases. Price instability remains and future demand is uncertain as companies continue to work down overdue deliveries and backlogs.”

Here is a sample of ISM manufacturing PMI survey respondent commentary for May:

• “Overall impact for our business is mixed. Our scientific instrumentation business continues to be weakened by lending to support capital purchasing, while services and consumables stay on track and continue to increase in some markets. Hiring has slowed in response to continued global uncertainty on inflation and unrest in Europe.” (Computer & Electronic Products)
• “Demand continues to gain momentum due to new business pipelines finally yielding billable production. Personal care and home care are drivers.” (Chemical Products)
• “We continue to have a strong backlog for our customer orders; however, new orders are slowing. Our supplier on-time delivery continues to be a challenge for us, and we still face price increases on a weekly basis. Labor shortages are getting better within our organization and throughout our supply chain.” (Transportation Equipment)
• “Pricing seems to be becoming the primary focus of supply and sourcing teams, as customers and consumers are beginning to push back. While inflation is easing on some discretionary goods, high food costs persist across most categories.” (Food, Beverage & Tobacco Products)
• “Business is returning to pre-pandemic levels. There is increased demand in commercial/government markets and reduced demand in residential/consumer markets.” (Machinery)
• “Less volatility in customer demand from one month to six months out; seeing signs of slowing in the second half of 2023 and potentially into early 2024. Logistics, particularly from East Asia, continue to return to historical-level transit times; Europe and India remain elevated. Supply shortages are limited to select items only. Suppliers are still seeking price increases but are too late to be asking now.” (Fabricated Metal Products)
• “Although sales are slightly lower, they are holding at current rate — soft, not catastrophic.” (Furniture & Related Products)
• “Moderate increase in customer orders/demand, supplier deliveries improving, and raw material prices stable to soft.” (Plastics & Rubber Products)
• “Business conditions are good, demand remains strong, and we are continuing to ramp up production to keep up.” (Miscellaneous Manufacturing)
• “Industrial and high-tech demands are pushing out, as a slowdown is clear. This is stunting growth and currently making 2023 demand look flat to only slightly up, compared to original projections of 10-percent growth.” (Electrical Equipment, Appliances & Components)