US Manufacturing Activity At Four-Year High

U.S. manufacturing activity grew faster than expected in May, reaching its highest level in four years as businesses rushed to place orders and build inventories amid supply-chain concerns and rising costs linked to the conflict with Iran.

The Institute for Supply Management said its Manufacturing PMI rose to 54.0 in May, up from 52.7 in April and the strongest reading since May 2022. A reading above 50 indicates growth in the manufacturing sector, which accounts for roughly 9.4% of the U.S. economy.

Some economists, however, are warning that the increase may be temporary. Many companies are ordering extra supplies and building up inventory now to prepare for possible shortages or higher prices in the future. While that has boosted manufacturing activity in the short term, demand could slow once those inventories are built up.