The Institute for Supply Management (ISM) reported on June 1, 2026, that the Manufacturing PMI® registered 54 percent in May, a 1.3 percentage point increase from April's reading of 52.7 percent and its highest level since May 2022 (55.9 percent). This marks the fifth consecutive month of expansion in the manufacturing sector, raising optimism across the global precision machining and metalworking supply chain.
Key PMI Indicators Point to Broad-Based Expansion
The May 2026 ISM Manufacturing PMI report, chaired by Susan Spence of the ISM Manufacturing Business Survey Committee, reveals several critical trends:
- New Orders Index: 56.8 percent — up 2.7 percentage points from April's 54.1 percent, expanding for the fifth consecutive month after four straight readings in contraction territory. This signals robust demand for manufactured goods including precision-machined components.
- Production Index: 54.3 percent — a 0.9 percentage point gain from April's 53.4 percent, reflecting increased factory output across the sector.
- Prices Index: 82.1 percent — still elevated but easing 2.5 points from April's 84.6 percent reading, as input cost pressures moderate slightly.
- Employment Index: 48.6 percent — up 2.2 points from 46.4 percent in April, indicating that while factory hiring remains in contraction, the pace of decline has meaningfully slowed.
- Backlog of Orders Index: 52.2 percent — up 0.8 point from 51.4 percent, suggesting increasing order backlogs that will sustain production momentum into Q3 2026.
- New Export Orders Index: 50.6 percent — returning to expansion territory after April's 47.9 percent reading, a positive signal for overseas demand.
- Supplier Deliveries Index: 60.6 percent — remaining elevated for the sixth consecutive month, indicating continued supply chain tightness.
- Customers' Inventories Index: 42.7 percent — remaining in "too low" territory, which ISM historically views as a positive signal for future production.
Geopolitical and Pricing Context
According to Susan Spence, the May survey panel revealed that "the Iran war was mentioned in 42 percent of comments, and tariffs in 18 percent; 57 percent of the panelists mentioned pricing volatility as an issue for their companies." These geopolitical factors continue to influence supply chain decisions and raw material costs across the metalworking industry.
The United States S&P Global Manufacturing PMI also reported strongly, with the May flash reading coming in at 55.3, significantly above both the forecast of 53.8 and the previous month's 54.5. The combination of the ISM and S&P Global surveys paints a picture of accelerating manufacturing activity.
CNC Machinery Orders Maintain Momentum
Complementing the PMI data, the Association for Manufacturing Technology (AMT) reported on June 8, 2026, that new orders of metalworking machinery in the US totaled $593.6 million in April. While this represented a 12.5 percent sequential decline from March's $681.3 million, it marked a 33.2 percent increase year-over-year compared to April 2025.
Year-to-date through April 2026, manufacturing technology orders have reached $2.19 billion — a 28.9 percent increase over the same period in 2025. This sustained investment in CNC machinery and metalworking equipment signals strong confidence among manufacturers in the demand outlook for precision-machined components.
The first quarter of 2026 was especially robust, with manufacturing technology orders totaling $1.61 billion, up 27.8 percent year-over-year. March 2026 alone saw $681.3 million in orders, increasing 40.3 percent from February and 31.5 percent from March 2025, according to AMT's Christopher Chidzik.
Global Manufacturing PMI Trends
The positive momentum extends beyond US borders. The J.P.Morgan Global Manufacturing PMI compiled by S&P Global rose to 52.6 in April 2026, up from 51.3 in March — its highest level in over four years (since March 2022). The headline PMI has remained above the neutral 50.0 mark for nine successive months.
Key country-level PMI readings (April 2026 data):
- Japan: 55.1 — strongest expansion among major Asian economies
- Taiwan: 55.3 — reflecting robust electronics and semiconductor manufacturing
- India: 54.7 — sustained growth driven by manufacturing modernization
- United Kingdom: 53.7 — recovering from earlier contraction
- Canada: 53.3 — strongest improvement since June 2022
- Eurozone: 52.2 — highest in nearly four years
- Germany: 51.4 — modest expansion despite industrial headwinds
- China (Caixin): 52.2 — fastest expansion since December 2020
- China (NBS Official): 50.0 — manufacturing activity stagnated in May as new orders contracted
China's official NBS Manufacturing PMI edged down to 50.0 in May 2026 from 50.3 in April, with new orders shrinking (49.9 vs 50.6) and foreign orders declining (48.6 vs 50.3). Output growth eased to a three-month low at 51.2. Input cost inflation moderated but remained elevated at 60.5.
Nearshoring and Supply Chain Reshaping
The strong US manufacturing data is occurring against a backdrop of accelerating nearshoring and reshoring activity. A Bain & Company survey found that over 80 percent of large manufacturers plan to shift supply chains closer to their end markets. Mexico has now surpassed China as the United States' top trading partner, a historic shift in North American supply chain dynamics.
A peer-reviewed study published in the European Journal of Political Economy (Volume 93, June 2026) by researchers Ando, Hayakawa, Kimura, and Mukunoki provides quantitative evidence of increasing reliance on political friend-shoring and recent progress in reshoring amid heightened geopolitical risks. The study found that the degree of friend-shoring dependence is "consistently most substantial for Factory America," while political motivations remain relatively less pronounced for Factory Asia.
For precision CNC machining companies serving international markets, these trends create both opportunities and challenges. The reshoring wave is generating new demand for domestic and nearshore machining capacity, while simultaneously creating competitive pressure on pricing and delivery lead times.
AI Adoption in Metalworking Accelerates
According to a January 2026 report in Quality Magazine by Kelly Aulenback, the metalworking industry is rapidly embracing AI to address its persistent labor shortage — the Manufacturing Institute estimates 3.8 million manufacturing jobs will need to be filled by 2033, with 1.9 million expected to remain vacant. Over 84 percent of manufacturing leaders are accelerating adoption of digital technologies, and 80 percent are investing 20 percent or more of their improvement budgets into smart manufacturing initiatives.
AI is being deployed across CNC machining operations to upskill existing workers, optimize toolpaths, predict maintenance needs, and improve first-pass yield — all critical for metalworking job shops seeking to remain competitive in the current expansion cycle.
Outlook for Precision Machining
The combination of strong US PMI data, accelerating capital investment in CNC machinery, global manufacturing expansion, reshoring momentum, and AI-driven productivity improvements creates a favorable environment for precision machining companies in 2026. However, elevated input prices (ISM Prices Index at 82.1), supply chain tightness (Supplier Deliveries at 60.6), and ongoing geopolitical uncertainty (the Iran conflict cited by 42% of survey panelists) remain significant risk factors.
US precision machining market is projected to reach $23.07 billion in 2026, driven primarily by aerospace demand for tight-tolerance titanium and Inconel components. Suppliers with AS9100D, ISO 9001, and multi-axis CNC capabilities are best positioned to capture this growth.
Key Takeaways for CNC Machining Buyers and Suppliers:
- ✅ US manufacturing is in its most sustained expansion since mid-2022 — a strong market for precision components
- ✅ New export orders have returned to expansion — international demand recovering
- ✅ Metalworking machinery orders up 28.9% year-to-date — companies are investing in capacity
- ✅ Customers' inventories remain "too low" — expect continued restocking demand
- ✅ Nearshoring to Mexico and reshoring to the US are structural shifts creating new supply chain opportunities
- ⚠️ Pricing volatility and input cost inflation remain major concerns for manufacturers
Data sources: Institute for Supply Management (ISM), S&P Global, Association for Manufacturing Technology (AMT), J.P.Morgan Global Manufacturing PMI, Trading Economics, Bain & Company, European Journal of Political Economy. This report is compiled by Dongguan Stirlingte Metal Products Co., Ltd. — your partner for high-precision CNC machining services.
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