U.S. Manufacturing Hits Four-Year High as Supply Chains Strain Under Middle East Conflict

June 2, 2026

Mintesinot Nigussie

U.S. factory activity accelerated in May to its strongest level in four years, even as manufacturers warned that geopolitical tensions and supply disruptions linked to the war involving Iran were reshaping costs, demand patterns and delivery schedules across industrial supply chains.

The Institute for Supply Management reported that its manufacturing purchasing managers’ index rose to 54.0 in May from 52.7 in April, marking the highest reading since May 2022.

The improvement extended a five-month growth streak for the sector. The gains were partly attributed to front-loaded ordering activity as firms responded to rising prices and uncertainty over future supply conditions.

However, the underlying survey painted a more fragile picture of industrial stability. Businesses across segments including transportation equipment and fabricated metals reported “escalating” costs and growing reluctance among customers to commit to longer-term spending.

The conflict in the Middle East, which has disrupted key shipping routes, was repeatedly cited by manufacturers as a central source of strain. About 69 percent of comments were negative.

Energy and industrial inputs were among the most affected categories, with disruptions contributing to higher costs for goods such as aluminium, fertilizers and other commodities.