The freight downturn that defined 2023 and 2024 has decisively reversed, and the May data clarifies the mechanism behind it: industrial production, rather than consumer spending or inventory restocking, is now driving the cycle. FreightWaves identified the inflection months ago. The latest readings from the Institute for Supply Management and the Logistics Managers’ Index, corroborated by real-time tender data, confirm it.
The ISM Manufacturing PMI registered 54.0 in May, up 1.3 points from April and the highest reading since May 2022. The index has now held above the expansion threshold for five consecutive months, following a 10-month contraction. On ISM’s own regression, a 54.0 composite is consistent with roughly 2.2% annualized growth in real GDP.
The internals are stronger than the headline. The New Orders index rose to 56.8, comfortably above the 51.9 level ISM identifies as the breakeven for rising Census manufacturing orders in constant dollars. Production reached 54.3, above the 52.0 threshold ***** ociated with rising Federal Reserve industrial output. As a forward-looking series, new orders typically lead realized freight volumes by several weeks, which makes the current reading the more economically meaningful of the two.
Breadth reinforces the signal. All six of the largest manufacturing industries expanded in May — led by computer and electronic products, machinery, and transportation equipment — and 16 of 18 industries reported growth, with only wood products in contraction. Diffusion of this width is characteristic of a self-sustaining expansion rather than a narrow, sector-specific rebound.
The labor data points to a productivity-led expansion. The Employment index came in at 48.6 — still below the 50.3 breakeven for rising BLS manufacturing payrolls, but up 2.2 points and trending toward it. Manufacturers have expanded output for seven straight months while holding headcount roughly flat, indicating they are absorbing incremental demand through existing capacity. Payroll growth typically lags output in the early phase of an industrial recovery; the trajectory of the employment index suggests hiring is the next stage.
The ISM Manufacturing PMI registered 54.0 in May, up 1.3 points from April and the highest reading since May 2022. The index has now held above the expansion threshold for five consecutive months, following a 10-month contraction. On ISM’s own regression, a 54.0 composite is consistent with roughly 2.2% annualized growth in real GDP.
The internals are stronger than the headline. The New Orders index rose to 56.8, comfortably above the 51.9 level ISM identifies as the breakeven for rising Census manufacturing orders in constant dollars. Production reached 54.3, above the 52.0 threshold ***** ociated with rising Federal Reserve industrial output. As a forward-looking series, new orders typically lead realized freight volumes by several weeks, which makes the current reading the more economically meaningful of the two.
Breadth reinforces the signal. All six of the largest manufacturing industries expanded in May — led by computer and electronic products, machinery, and transportation equipment — and 16 of 18 industries reported growth, with only wood products in contraction. Diffusion of this width is characteristic of a self-sustaining expansion rather than a narrow, sector-specific rebound.
The labor data points to a productivity-led expansion. The Employment index came in at 48.6 — still below the 50.3 breakeven for rising BLS manufacturing payrolls, but up 2.2 points and trending toward it. Manufacturers have expanded output for seven straight months while holding headcount roughly flat, indicating they are absorbing incremental demand through existing capacity. Payroll growth typically lags output in the early phase of an industrial recovery; the trajectory of the employment index suggests hiring is the next stage.
8 hours ago
