U.S. manufacturing in May 2025 presented a mixed picture of modest growth and persistent headwinds. The S&P Global Purchasing Managers’ Index (PMI) for manufacturing climbed to its highest level since early 2025, signaling the strongest improvement in factory conditions in several months. In contrast, the Institute for Supply Management (ISM) Manufacturing PMI remained below the 50 threshold, indicating that overall factory activity continued to contract for the third consecutive month.
These divergent indicators reflect an uneven environment. While inventory stockpiling and tariff-related dynamics boosted some metrics, underlying demand and production remained subdued. Despite near-term uncertainties like rising input costs and trade policy shifts, manufacturers pressed ahead with significant new investments. A number of high-profile factory projects were announced across sectors in May, underscoring a long-term commitment to domestic production and innovation.
A Month in Manufacturing Data
ISM Manufacturing PMI in May
According to ISM’s Report On Business, the May Manufacturing PMI® registered 48.5%, a slight dip from 48.7% in April, and firmly below the neutral 50 mark. This reading marks the third straight month of contraction in the U.S. manufacturing sector, after a brief two-month expansion earlier in the year. Notably, some key sub-indices showed mild improvement even as they remained in negative territory. The New Orders Index came in at 47.6% (up from 47.2% in April) and the Production Index at 45.4% (up from 44.0% in April), indicating that demand and output contracted at a slightly slower pace than in the prior month.
However, factory employment continued to shrink (Employment Index 46.8%) and backlogs remained in contraction. Price pressures persisted as well – the ISM Prices Index stayed elevated at 69.4%, signaling increasing input costs for manufacturers despite a marginal easing from April’s level. In summary, the ISM data portrays a sector still facing weak demand and high costs, with only incremental signs of stabilization on the horizon.
S&P Global Manufacturing PMI in May
S&P Global’s US Manufacturing PMI told a somewhat more positive story for May. The index rose to 52.0, up sharply from 50.2 in April and marking the fifth consecutive month of expansionary (>50) conditions. This 52.0 PMI figure was the highest since February and points to a notable uptick in overall operating conditions. Under the surface, though, the drivers of May’s PMI improvement appear to be temporary.
Survey responses indicated that manufacturers and their customers ramped up purchases to build inventories at an unprecedented rate, aiming to get ahead of anticipated supply disruptions and price hikes linked to tariffs. This front-loading of orders boosted the new orders component to its strongest growth in three months. At the same time, actual production levels have yet to fully rebound – S&P Global noted that its output index signaled a slight drop in production for a third straight month, offsetting gains seen early in the year.
Likewise, firms were cautious on hiring, with employment generally flat. The price environment worsened in May, as more manufacturers reported raising prices – the incidence of factory price hikes was the highest since late 2022. Taken together, the S&P Global PMI suggests the manufacturing sector expanded modestly in May, but largely due to short-term stockpiling and supplier delays rather than a broad-based surge in demand. This points to a fragile growth that could falter once the temporary boost from inventory building passes.
Major New Factory Announcements
Even as the manufacturing data showed only tepid growth, industry investment activity remained robust. May 2025 saw major manufacturing projects unveiled across the country, with commitments spanning energy storage, packaging, food processing, and life sciences, among other sectors. These announcements, many of them large-scale, signal continued confidence in U.S. manufacturing’s future. Notable new factories and expansions announced in May include:
Fluence Energy (Arizona)
Fluence expanded its U.S. footprint by beginning production at a new facility in Goodyear, AZ, to manufacture battery energy storage system components. This plant is part of Fluence’s onshoring strategy and contributes to the company’s $700 million in domestic manufacturing investments for 2025, which are creating about 1,200 manufacturing jobs. The Arizona site will build battery enclosures and control hardware using U.S.-sourced steel, strengthening supply chains for grid-scale energy storage.
Mars/Royal Canin (Ohio)
Global food manufacturer Mars, Inc. opened its largest dry pet food factory in the world in Lewisburg, OH to produce Royal Canin pet food. The 450,000 sq. ft. facility represents a $450 million investment and will significantly boost pet food production capacity. The plant is expected to create up to 270 full-time jobs over the next five years as it feeds millions of cats and dogs annually with domestically made kibble. This marks a major U.S. manufacturing expansion for Mars and comes with sustainability features like a Silver LEED certification.
Chobani (New York)
Yogurt and food company Chobani broke ground on a $1.2 billion dairy processing plant in Rome, NY, its third U.S. facility and largest domestic investment to date. The planned 1.4 million-square-foot plant will process up to 12 million pounds of milk per day at full capacity and is slated to create over 1,000 jobs in central New York. This massive project will expand Chobani’s production of dairy products and support local farmers, reinforcing the trend of food manufacturers investing heavily in U.S. production capabilities.
AstraZeneca (Maryland)
Pharmaceutical firm AstraZeneca officially opened a new $300 million advanced manufacturing facility in Rockville, MD, focused on cutting-edge cell therapy production. The 84,000 sq. ft. plant will produce CAR-T cell therapies (personalized cancer treatments) and support clinical trials, bolstering the biomanufacturing ecosystem in the region. This project is part of AstraZeneca’s broader $3.5 billion nationwide investment in research and manufacturing and is expected to create 150+ skilled jobs in Maryland. The facility underscores growth in bio-life science manufacturing and the push for domestic capacity in high-tech therapeutics.
These investments, along with other May announcements in sectors like packaging (e.g. Elopak’s first U.S. carton plant in Arkansas) and metal fabrication (e.g. United Alloy’s expansion in Ohio), amount to billions of dollars and thousands of new jobs in coming years. They represent a strong vote of confidence in the long-term trajectory of U.S. manufacturing, even as the current business climate remains challenging. If realized, these projects will not only boost regional economies but also enhance national production capabilities in critical industries.
Future Outlook
Looking ahead, the U.S. manufacturing sector faces a cautious road, balancing short-term headwinds against longer-term opportunities. Demand conditions remain uncertain. The flurry of inventory building in May, driven by tariff concerns, could be followed by a payback period of slower orders and production in subsequent months once inventories are stocked. Both ISM and S&P data indicate that core production levels are still soft, suggesting any near-term growth will be fragile until underlying demand truly strengthens.
Additionally, cost pressures and policy risks continue to cloud the outlook – input prices are elevated, and trade policy shifts (such as tariffs) have introduced volatility in supply chains and pricing. Broader economic uncertainties like high inflation, rising interest rates, and energy costs also pose ongoing challenges that could restrain manufacturing activity.
On the positive side, there are reasons for guarded optimism. The fact that one PMI index remains in expansion territory suggests the sector has pockets of resilience. More importantly, the wave of new factory investments announced in recent months is expected to come online through 2025–2026, bringing additional capacity and jobs.
This capital influx – from batteries and solar components to food and pharma production – is a bullish indicator for U.S. manufacturing’s future and could serve as an economic catalyst once these facilities ramp up. If the broader economy stabilizes and consumer/business spending picks up, pent-up demand could materialize to fill the expanded production capability.
U.S. manufacturing enters the middle of 2025 with a mix of caution and confidence. The immediate term will likely see manufacturers navigating a “bumpy” period of choppy demand and cost pressures. Supply chain resilience and cost management remain top priorities in this volatile environment. However, assuming no major external shocks, the foundation is being laid for a potential rebound: as temporary distortions (like tariff-driven inventory surges) work through and new investments bear fruit, the sector could gradually regain momentum.
The substantial commitments to domestic production announced this year underscore that many firms are positioning for growth in America’s industrial base. Barring a severe downturn, this combination of strategic investment and an eventual easing of headwinds could set the stage for a more durable manufacturing recovery in the coming quarters.
