US manufacturing activity reaches four-year high as input prices stay stubbornly elevated

US factories just posted their best month since May 2022. The ISM Manufacturing PMI hit 54.0 in May 2026, up from 52.7 in April and comfortably above the 53.0 that economists had penciled in. Five consecutive months of expansion is the kind of streak that gets analysts excited. But the prices paid index is sitting at 82.1, and factory employment has been shrinking for 32 straight months. The numbers behind the headline New orders came in at 56.8. Sixteen of eighteen reporting industries logged growth, with electrical equipment, machinery, and transportation equipment leading the charge. Supplier deliveries hit 60.6, a reading that signals meaningful slowdowns in the supply chain. The prices paid index at 82.1 cooled technically from April’s 84.6 reading. Shortages in aluminum and steel are doing most of the damage, squeezing margins for manufacturers who can’t easily pass costs along to customers. Factory employment contracted for the 32nd consecutive month. Nearly three years of uninterrupted workforce shrinkage, even as output surges. Why factories are running hot (and why it might not last) The ongoing US-Israeli conflict with Iran has disrupted shipments through the Strait of H...