US ISM Manufacturing Index Hits Four-Year High in May on AI Demand Surge

The Institute for Supply Management’s manufacturing index climbed to 54 in May, the highest since May 2022 and above the 53 forecast, signaling a fifth straight month of expansion. Artificial intelligence infrastructure spending drove broad-based gains, with the new orders index jumping to 56.8. The S&P Global US manufacturing PMI also notched a more than four-year high at 55.1, confirming the sector’s momentum. Nearly all industries grew, led by electrical equipment and plastics, though wood products contracted. New orders, production and export demand all accelerated, while backlogged orders expanded. Despite the strength, warning signs persisted. The employment index remained in contraction for a 32nd consecutive month at 48.6, and US factories have shed about 77,000 jobs since early 2025. Supplier deliveries held at 60.6, indicating worsening delays, while the prices paid index stayed near 2022 highs at 82.1. Analysts warned that stockpiling and supply-chain disruptions are stoking stagflation risks, and last week’s 3.8% annual PCE inflation reading remains well above the Federal Reserve’s 2% target.