U.S. Manufacturing PMI Signals Robust Expansion Fueled by Surge in Domestic New Orders; Canada and Mexico PMIs Register Sharp Declines
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Seeing as how the ISM Manufacturing PMI shows a contraction thanks to declining new orders, it's really puzzling that the mixed "soft data" is confusing us even more. Take the contrasting PMIs from S&P, for example.
In the realm of American manufacturing, two PMIs debuted today - the ISM Manufacturing PMI and the one from S&P Global. These indexes are akin to whispers of the manufacturing sector's health, derived from a concoction of surveys to hundreds of purchasing managers from assorted industries.
The ISM Manufacturing PMI zeroes in on new orders, production, employment, supplier deliveries, and inventories, with a magic number of 50 separating expansion from contraction. On the flip side, the S&P Global US Manufacturing PMI assesses new orders, output, employment, suppliers' delivery times, and stocks of purchases, using the same 50 as a threshold.
One major divergence here is the size of each survey's respondent pool. The ISM's PMI has a more modest sample compared to S&P's, which could mean disparate perceptions of trends based on the industries and sectors represented.
Furthermore, our interpretations of economic conditions can lead to varied assessments of manufacturing activity. Case in point: S&P noted robust expansion in May 2025 due to an explosion in domestic new orders, whereas the ISM reported contraction due to sliding new orders during the same period.
Additionally, the way analysts and economists interpret data can vary, which could be why the S&P PMI saw "solid overall growth" in May while the ISM PMI signaled a contraction.
All these discrepancies boil down to the mixed signals from the ISM and S&P PMIs, making it tough to decipher the US manufacturing sector's health based on those "soft data." Recent economic trends, like tariffs and supply chain disruptions, could be influencing businesses in unique ways, leading to discordant responses in the surveys. Moreover, altering market sentiments and expectations could cause discrepancies among surveys, capturing varying glimpses of the manufacturing sector's mood and outlook.
- In light of the ISM Manufacturing PMI's contraction due to declining new orders and the S&P PMI's indication of solid overall growth, it seems there's a disparity in the financial outlook of the American manufacturing industry between these two indexes.
- As the ISM Manufacturing PMI signals a contraction in the industry due to decreased new orders, while the S&P Global US Manufacturing PMI indicates robust expansion thanks to surging domestic new orders, it's evident that the industry's financial health, as presented by these soft data, is not consistent.
