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Manufacturing PMI’s fell from 48.7 to 48.5 in May (anything below 50 signals a contraction), for the 4th straight monthly decline. Only 7 of 18 manufacturing industries reported growth for the month.

The three most forward looking components all declined (New orders: 47.6, Production: 45.4, Employment: 46.8), while prices paid remains stubbornly high.

It’s important to note that although the manufacturing sector declined, it remains above the level typically associated with an economy wide recession (grey horizontal line).

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Services PMI fell from 51.6 to 49.9, for the first monthly decline since June 2024. 10 of 18 industries reported growth. Although it remains above the level typically associated with economy wide recession (grey horizontal line).

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New orders fell sharply in May (from 52.3 to 46.4), one of the lowest readings in years, while business activity remained unchanged, and employment moved into expansion.

Prices paid index rose to an almost 3 year high, with 16 of 18 services industries paying higher prices for input costs.

In the last 5 years (60 months), there has only been 4 months where the services & manufacturing PMI’s declined at the same time. Business conditions remain difficult, its hard to make plans with all of the uncertainty. Respondents all cited the tariffs, federal budget cuts, and uncertainty surrounding future policy, as the main problems.

While these results are indicative of an economic slowdown, there aren’t at the level of recession just yet. There may still be time to avoid such as outcome, especially considering the budget cuts don’t appear to be nearly as harsh as was advertised, and there are many exclusions from the tariffs as companies also find ways to workaround them (first sale rule).

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