June 2026 – Page 69 – TheStreetPro TSP Site

Boockvar on Manufacturing

Doug Kass on June 1, 2026

From Peter Boockvar:

Manufacturing continuing to benefit from order pull forwards, along with the obvious

The May ISM manufacturing index rose to 54 from 52.7 and was 1 pt above the estimate. Strength in new orders helped again, rising by 2.7 pts m/o/m to 56.8 and backlogs were above 50 for the 5th month in a row at 52.2. Inventories got to 49.9, around the flat line but that is the highest since April 2025. Customer inventories remain well below 50 at 42.7 but that is the highest in 5 months.

Employment was in contraction again at 48.6 but up 2.2 pts m/o/m.

With respect to the supply chain, Supplier Deliveries were unchanged at 60.6 but remaining at the highest level since May 2022 and the higher it is, the slower the lead times. Prices paid slipped back by 2.5 pts to a still very high 82.1 and after rising by 6.3 pts in April to the highest since March 2022. ISM said this on prices, “The Prices Index reading is still being driven by (1) increases in steel and aluminum prices that impact the entire value chain, (2) tariffs applied to many imported goods and (3) increases in petroleum-based products as a result of the Middle East conflict.”

Export orders lifted by 2.7 pts to 50.6 as I’m sure everyone around the world scrambles to front run orders with the US a key supplier.

Industry breadth further improved with 16 of 18 industries seeing growth vs 13 in the two prior months. In December it was at just 2. One saw a contraction, ‘wood products’, vs 3 in April.

I’m going to steal the bottom line from today’s S&P Global US manufacturing PMI because I believe it helps best to describe what has contributed to the improvement in global manufacturing over the past few months:

“At first glance, the manufacturing sector seems to be firing on all cylinders but lift the hood and the picture is not so clear…since the outbreak of war in the Middle East we have seen production and demand buoyed by stock building as companies worry over rising prices and supply difficulties. This stockpiling was again widely evident in May and makes it hard to take an accurate reading on the underlying health of the manufacturing economy, as growth will cool once this stock build has run its course.”

I’ll add to this, not mentioned but obvious, anyone making anything going into the date center construction is benefiting hugely of course.

And, “The incidence of supply chain delays is the highest since August 2022, with the buying of safety stocks not only adding to the supply squeeze from the closure of the Strait of Hormuz but also pushing prices higher for a wide variety of inputs…Manufacturers’ own charges rose to the greatest extent since September 2022 as they sought to pass through their own higher expenses to clients wherever possible.”

The respondent comments in the ISM are filled with worries about supply chains and rising costs:

“Impact of Iran conflict starting to directly and negatively impact cost of supply chain. Oil and related commodities are escalating in price.” [Transportation Equipment]

“The Middle East conflict is triggering shipment delays and uncertainties. Elevated gas prices and inflation will surely impact our purchases. However, over the last quarter, we’ve seen increased demand that was unexpected.” [Machinery]

“As with all companies, we have felt the effects of fuel-related inflation and general market uncertainty due to overall economic variability and geopolitical events that have impacted such markets as construction, automotive and agriculture, as well as the general industrial sector.” [Chemical Products]

“Continuing trends of 15-percent sales increase in April, cost increases on a majority of raw materials, and fuel charges on many inbound and outbound deliveries. We remain cautiously optimistic that if global economic factors stabilize and the Iran conflict ends, we can continue with increased sales and maintain acceptable margins.” [Chemical Products]

“Cost of diesel is having huge impacts on our profitability. Confusion abounds around tariff refunds. We purchase many imported goods but in most cases are not the importer of record, so it is currently unclear to what we may be entitled.” [Food, Beverage & Tobacco Products]

“Prices continue to rise for many products — some due to increase in data center creation for electronic components, others as a result of the Iran war and reductions in availability of oil/petroleum.” [Computer & Electronic Products]

“Supply constraints continue to propagate and are a key headwind to supporting increased aerospace and defense demand. Semiconductors, critical minerals and certain types of raw materials are illustrative examples of sales plans at risk. Corporate risk mitigation actions are underway to secure supply in the midst of constraints.” [Transportation Equipment]

“The current atmosphere is one of extreme uncertainty and concern for the future in terms of both price stability and longer-term supply continuity related to the Iran conflict and Strait of Hormuz closure. We have a lot of negotiations in process related to requested price increases, some related to oil prices and some still fallout from the 2025 tariff/geopolitical climate.” [Miscellaneous Manufacturing]

“Continued dynamic random-access memory (DRAM) volatility, increased gas prices and tariffs are causing long lead constraints and price hikes that customers are not willing to bear. Panic is starting within our industry.” [Electrical Equipment, Appliances & Components]

“Business appears to be weakening — uncertainty surrounding the Iran war, rising energy prices and customers unwilling to commit to expenditures beyond a very short term.” [Fabricated Metal Products]

Treasury yields are rising but all related to the jump in oil prices.

ISM Mfr’g