US Factories Look Stronger, But Price Pressures Are Back

May’s flash data showed manufacturing growth beating forecasts while supply disruptions and tariffs pushed input costs higher, even as the broader economy still points to only modest expansion.

What’s going on here?

US factory activity looked stronger in May, but the same survey showed supply delays and input costs heating up again as tariffs and shipping disruption raised prices.

What does this mean?

S&P Global, a financial data firm, said its flash US manufacturing Purchasing Managers’ Index (PMI) – a survey-based read on business conditions – rose to 55.3 in May, the strongest since mid-2022. But the report also hinted at a more defensive mood: companies built “safety stocks” as supplier delivery times worsened to their weakest since August 2022. S&P Global linked part of the renewed bottlenecks to disruption around the Strait of Hormuz, a key shipping route, which has pushed up energy and transport costs and contributed to shortages in inputs like fertilizers and aluminum. Layer in broad US tariffs, and the inflation signal got louder: manufacturers reported a sharp jump in input prices and a rise in the prices they charge customers. The awkward bit is demand isn’t roaring. S&P Global noted order-book growth has slowed to a two-year low, and its composite PMI suggests the broader economy is still growing only modestly. That mix – rising costs with softer demand – can squeeze profits and keep inflation worries alive at the same time.

Why should I care?

For markets: Working capital can become the hidden pressure point.

When deliveries slow, many goods-heavy companies respond by holding more inventory. That ties up cash on the balance sheet just as input bills rise, making quarterly results more sensitive to swings in both gross margins and cash flow. Firms that rely on fertilizer- or aluminum-intensive supply chains may feel it first, especially if weaker order growth limits how quickly they can pass higher costs on.

For you: Shipping bottlenecks can creep into everyday prices.

Higher energy and freight costs rarely stay at the pump or on a cargo invoice. They tend to filter into the delivered cost of everyday goods, and the survey suggests more manufacturers are trying to raise selling prices to keep up. If disruptions persist, the pinch can show up in places like parts of the food bill linked to fertilizer costs and in aluminum-heavy packaged products.

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Originally Posted May 21, 2026 – US Factories Look Stronger, But Price Pressures Are Back