The manufacturing sector can't seem to catch a break. May's ISM manufacturing PMI landed at a tepid 48.5, keeping the industry firmly in contraction territory—where it's been camped out for most of the past two years.
But here's the real kicker: imports have absolutely cratered to 39.9, the lowest reading since 2009. Remember 2009? When we were all trying to figure out if banks would still exist the following week?
What's behind this import collapse? Tariffs. Big, messy, confusing tariffs.
I've covered manufacturing trends since the pre-pandemic era, and something feels different this time. When 86% of survey respondents mention tariffs in their comments, you're witnessing more than just a typical business concern—it's become an obsession.
Several executives I spoke with described current conditions as reminiscent of 2020. Let that sink in. Manufacturing leaders are feeling nostalgic for the pandemic era. (If that doesn't tell you something's seriously wrong, I don't know what will.)
The policy landscape has become what one Chicago-based purchasing manager called "a nightmare soup of uncertainty." President Trump's recent tariff adjustments—scaling some back while doubling down on others—has created a patchwork approach that's left many companies frozen in decision paralysis.
Businesses, as a rule, hate uncertainty more than they hate taxes. Right now? They're drowning in both.
Look, tariff impacts aren't simple. They cascade through the economy in layers—direct cost increases, supply chain reconfigurations, and what I've heard multiple economists refer to as the "uncertainty premium." That last one is currently thick enough to choke on.
What's particularly fascinating (or troubling, depending on your perspective) is the divergence between major indices. While ISM shows contraction at 48.5, S&P Global's manufacturing PMI sits comfortably in expansion territory at 52.
So which is it? Growing or shrinking?
The answer lies beneath the surface numbers. Chris Williamson at S&P Global points out companies are panic-buying and stockpiling inventory at "unprecedented rates." This isn't healthy growth—it's fear-based hoarding. It's the corporate equivalent of filling your bathtub before a hurricane hits.
We've seen this movie before, haven't we? The infamous bullwhip effect that whipsawed supply chains during the pandemic appears to be loading up for a sequel. Manufacturers overordering now could lead to inventory gluts later, creating yet another boom-bust cycle that nobody needs.
The ripple effects extend far beyond factory floors. When imports tank like this, it eventually hits everything from consumer prices to shipping rates. The Baltic Dry Index—a measure I check almost obsessively these days—has been bouncing around like a lottery ball, reflecting this chaotic trade environment.
"The only thing that can help is certainty," said Susan Spence from ISM. That's about as likely as finding affordable housing in San Francisco or a central banker who speaks plain English.
For investors trying to navigate this mess, it's becoming a sorting exercise. Companies with pricing power and domestically-oriented supply chains should outperform those caught in the international tariff crossfire. But even domestic manufacturers aren't immune when their components cross borders multiple times.
Are we heading for a manufacturing recession? I'm not ready to make that call. But when import readings hit 2009 levels, it deserves more than a casual glance.
In the meantime, manufacturers will continue building inventory bunkers while praying for policy clarity. Consumers will eventually feel the squeeze. And economists? They'll debate whether this is inflationary, deflationary, or some new economic state that deserves its own fancy name.
The only certainty in manufacturing right now is uncertainty itself. And that's exactly what the sector needs least.
