New York (AFP) – Robust demand led to stronger-than-expected US manufacturing activity in May despite tariff threats that have raised prices and stoked fears of a trade war, according to an industry survey Friday.
The Institute for Supply Management’s closely-watched Purchasing Manufacturing Index for US manufacturing came in at 58.7 in May, up 1.4 percentage points from April and better than analyst expectations.
The index showed gains in most key areas, including new orders, production, employment and supplier deliveries.
Industry respondents to the survey pointed to robust activity, but also worries ranging from the tight labor market to the drag of the strong dollar on exports to talk of a trade war.
The survey in recent months has cited concerns rising steel and aluminum prices due to the tariffs President Donald Trump imposed in March. Major suppliers Canada, Mexico and the European Union had been spared temporarily, but their exemptions expired Friday, so metals prices could rise further.
“We are currently overselling our forecast and don’t see an end to the upswing in business,” said a transportation equipment company.
“We are very concerned, however, about the tariffs proposed in Section 301 and are focusing on alternatives to Chinese sourcing.”
Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee, Fiore, said the tariffs will pinch supply chains, adding perhaps a week and a half for imported steel to clear customs.
“If the tariff does go into effect, the near-term effect is going to be supply disruptions and not really financial if you just look at aluminum and steel,” Fiore said, in a briefing with reporters.
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