Demand, Output, and Supply Chain Metrics
- Accelerating Demand: Both the New Orders Index (56.8%) and the Production Index (54.3%) grew at a faster pace than last month, while New Export Orders rebounded into expansion at 50.6%.
- Stabilizing Operations: The Employment Index (48.6%) and Inventories Index (49.9%) both edged closer to growth territory, contracting at a significantly slower rate than in April.
- Supply Chain Tightening: The Supplier Deliveries Index held flat at 60.6%—matching its highest level since May 2022—reflecting heavy customer demand and a constrained supply network.
Sector Performance and Economic Headwinds
- Widespread Growth: Out of 18 tracked sectors, 16 industries reported expansion—led by Computer & Electronic Products, Machinery, and Transportation Equipment—while Wood Products was the sole industry to contract.
- Persistent Inflation: Driven by tariffs, rising petroleum prices, and steel and aluminum costs, the Prices Index hit a staggering 82.1%, marking the 20th consecutive month of raw material price hikes.
- Geopolitical Disruptions: Supply executives face extreme uncertainty; 57% cited pricing volatility as a major threat, while 42% noted that Middle East conflicts and the closure of the Strait of Hormuz are delaying shipments and driving up commodity prices. Tariffs remain a primary concern for 18% of respondents.