May 2023 Manufacturing Report: What the Latest Numbers Reveal
Manufacturing has been in a slump since 2023 began, and the May 2023 Manufacturing ISM Report On Business shows a continuation of this trend. But while the manufacturing economy remains largely depressed at the end of the second quarter, movement in its individual metrics signals the potential for a positive trajectory in the back half of the year.
Here’s a closer look at the May 2023 numbers and trends and the ways they’re shaping manufacturing’s future.
Volatile metrics
The individual metrics of the May 2023 report show a range of volatility, especially when compared to the modest -0.2% movement in the overall purchasing managers’ index (PMI). New orders dropped by 3.1%, while backlogs plunged more than 5%, signifying continued cooling in the sector. Production ticked up 2.2%, indicating there’s still work to be done.
Exports remained relatively flat in May, but imports slumped 2.6% in the wake of global geopolitical turbulence. Inventories fell 0.5%, even as supplier deliveries dropped a full percent. These numbers pale in comparison to prices, which crashed 9% and fell into contraction territory.
Perhaps most surprising from the report is the employment metric, which showed a positive 1.2% uptick to remain in expansion territory. This better-than-expected figure could signal early successes from federal policies designed to bolster employment.
May’s movers and shakers
Amidst volatile metrics, the May report revealed several interesting insights as to the state of the U.S. economy.
- Employment has now seen two consecutive months of growth, despite two months of projected contraction. It’s a positive sign and may indicate future confidence in the manufacturing sector as we march into the back half of the year.
- The plunge in prices over the last month is a welcome relief, easing some of the pressure hampering industry and consumers. What remains to be seen is whether this pricing respite is temporary or the first of more volatile swings to come.
- The fact both new orders and backlogs are down can’t be ignored. Their decline suggests cause for concern the economy may continue to face challenges in the coming months.
May’s mixed bag of metrics paints a complex picture. Industry executives remain optimistic, but this optimism is flanked by healthy trepidation. While the trend is largely down, there’s hope in the recent plateau.
Better prospects on the horizon?
May’s overall PMI reveals a depressed outlook for the manufacturing economy, but a closer look shows many individual metrics are trending flat or upward — a sign of stability. Coupled with the impending arrival of summer demand, positive developments in production, employment, and prices suggest Q3 could be poised for a much-needed bounce back.
The current market provides a glimmer of hope for the future — one indicative of a more predictable, less volatile marketplace. While challenges still lie ahead, better prospects could be on the horizon for the U.S. manufacturing industry.
