02.06.2025

Current Developments and Economic Data on the ISM Index

The ISM Index for the US manufacturing sector reached a value of 48.5 in May 2025, representing a slight decrease compared to the previous month when the index was at 48.7. This development falls short of market expectations of 49.5 and marks the third consecutive month in which the index is below the 50 threshold, indicating a contraction in manufacturing.

ISM Index Components

  • Backlog of Orders: The index for order backlogs stood at 43.7 points in April, slightly below the previous month’s value of 44.5.
  • Employment: The employment index rose to 46.5 points in April, marking an increase from the previous month’s 44.7.
  • Inventories: The inventory index fell to 50.8 points in April, down from 53.4 in the previous month.

Market Impacts

The ISM Index is an important leading indicator of economic activity in the USA. A value below 50 signals a contraction in manufacturing, which could negatively impact economic growth. This could prompt investors to adjust their investment strategies, particularly regarding interest rates and bond markets.

Additional Economic Data

  • Inflation Rate: The annual inflation rate in the USA fell to 2.3% in April 2025, the lowest level since February 2021.
  • Leading Economic Index (LEI): The LEI of the Conference Board fell by 1.0% to 99.4 in April (base year 2016), indicating a slowdown in economic growth. Consumer expectations have continuously become more pessimistic since January 2025.

Outlook

Despite the current challenges in manufacturing, it is expected that the ISM Index could rise again in the coming years. Forecasts indicate a value of around 50 in 2026 and 52 in 2027. This development could provide positive impulses for the markets, especially if economic growth remains moderate and inflation stays under control.

For investors in German-speaking regions, these developments are of interest as they may have potential impacts on interest rates and bond markets. A stabilization or recovery of the ISM Index could lead to a positive perception of the US economy, which could affect global economic development.