American factories are humming at a pace not seen in years. The S&P Global US Manufacturing PMI hit a preliminary reading of 55.3 in May 2026, marking the strongest expansion in the sector since May 2022.

Anything above 50 signals growth. A reading north of 55 signals the kind of growth that makes economists sit up straight. And yet, the people actually running these factories are decidedly grumpy about it.

The numbers look great on paper

The ISM Manufacturing PMI has now held above the critical 50 threshold for four consecutive months, sitting at 52.7 in both March and April 2026. That represents the longest unbroken streak of expansion since 2022, when the post-pandemic industrial boom was still running hot.

The S&P Global figure ticked up from a final April reading of 55.1 to May’s preliminary 55.3.

Rising costs are eating the upside

Input costs increased at their fastest rate in nearly four years as of May 2026. Output prices followed the same pattern, meaning companies are both paying more and charging more.

Supplier delivery times have deteriorated to their worst levels since August 2022.

In the ISM’s survey, 42% of respondents flagged the Iran conflict as a significant concern affecting their operations. Another 18% specifically cited tariffs as a critical issue.

The tariff paradox

Trade barriers imposed in 2025 have created strong incentives for domestic production. When importing becomes more expensive or unpredictable, buying American becomes the path of least resistance for many supply chain managers. That shift has funneled demand toward US factories, contributing to the sustained PMI readings above 50.

The result is a kind of forced reshoring effect. Manufacturers are busier because the policy environment has tilted the playing field toward domestic suppliers. But the same tariffs that drive demand also raise the cost of imported inputs that many US factories still depend on.

What this means for investors

The sustained expansion in manufacturing activity creates a genuine tailwind for companies tied to domestic industrial production. Four consecutive months above the 50 line on the ISM index isn’t noise. It’s a trend.

Supply chain disruptions of the magnitude reflected in those delivery time numbers—the worst since August 2022—tend to create pricing dislocations in industrial metals, chemicals, and energy inputs.

With 42% of manufacturers flagging the Iran conflict as a material concern, any escalation or de-escalation in that theater could move industrial sentiment quickly.