US manufacturing output flatlined in May, posting a 0.0% change after a 0.7% increase in April, according to Federal Reserve data. Four consecutive months of gains came to an abrupt halt as supply chain disruptions and rising input costs squeezed the sector from both sides.

The stall is particularly striking because it arrived alongside what looked like a strong headline number from the other major manufacturing gauge. The ISM Manufacturing PMI climbed to 54.0 in May, up from 52.7 in April, marking a fifth straight month of expansion and the highest reading since May 2022. In English: one survey says factories are busier than they’ve been in three years, while actual output data says nothing moved.

Two data sets, two very different stories

That divergence is exactly what happened in May. The ISM production sub-index came in at a healthy 54.3, suggesting factory floors were humming. But the supplier deliveries index told a different story, sitting at 60.6. Anything above 50 on that metric means deliveries are slowing down, and 60.6 represents significant delays.

Total industrial production, which includes mining and utilities alongside manufacturing, managed only a 0.1% increase for the month. Manufacturing, the largest component, contributed exactly nothing to that figure.

The pricing picture wasn’t any friendlier. A full 57% of ISM panelists flagged pricing volatility as a concern.

Geopolitics and tariffs cloud the outlook

The Iran conflict was referenced by 42% of ISM respondents as a factor weighing on their outlook. Tariffs were cited by 18% of panelists.

What this means for investors

The supplier deliveries index at 60.6 deserves special attention. Persistent delivery delays tend to feed inflationary pressure because manufacturers start paying premiums to secure scarce inputs.

The 57% of panelists flagging pricing volatility suggests cost-push inflation hasn’t been fully tamed in the goods sector. Investors should be watching the supplier deliveries index and input price readings in coming months as leading indicators of whether May’s stall was a one-month hiccup or the start of a more persistent slowdown in factory output.