America has a muddled recovery in manufacturing

This is the chart that White House economic officials want you to see: A closely watched industry survey suggests a long U.S. manufacturing slump is giving way to a factory rebound.

Why it matters: By this measure, the manufacturing recession is over. Activity across the sector expanded for a fifth straight month in May after spending much of the last two years in contraction territory.

• But it is happening alongside miserable industry anecdotes about the Iran war's energy shock, tariffs and supply chain chaos.

Driving the news: The Institute for Supply Management's manufacturing purchasing managers' index — one of the most closely watched gauges of U.S. factory activity — hit 54 in May, the highest reading in four years.

• New orders, production and backlogs all strengthened.
• Alongside ISM's strongest reading since 2022, S&P Global's U.S. manufacturing PMI climbed to a four-year high in May, while regional surveys from the Richmond and New York Federal Reserve districts also showed stronger orders and shipments.

What they're saying: "The ISM manufacturing index at 54 is not the finish line. It is the opening bell," Peter Navarro, President Trump's senior counselor for trade and manufacturing, blasted out shortly after the report's release.

Yes, but: ISM survey respondents anonymously warned of "extreme uncertainty" tied to the Iran conflict, escalating fuel costs and supply-chain disruptions.

• One electrical equipment manufacturer said that "panic is starting within our industry" as customers balk at absorbing higher prices.
• Input costs remained stubbornly high, with ISM's prices-paid gauge near its highest levels since the inflation surge of 2021 and 2022.

The intrigue: Recent manufacturing strength may reflect precautionary stockpiling rather than a lasting surge in demand, as companies race to secure parts and inventory for fear of Iran-related supply disruptions.

• "At first glance, the manufacturing sector seems to be firing on all cylinders, but lift the hood, and the picture is not so clear," S&P chief business economist Chris Williamson said in a release.
• "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," he added.

Friction point: The manufacturing comeback is apparent in business surveys, though that's much less the case in hard economic data.

• If the U.S. were in the midst of a sustained manufacturing boom, you would expect to see it reflected in measures like factory output, which has improved in recent months but remains close to where it was several years ago.
• Factory payrolls have fallen in 12 of the past 15 months, complicating an administration promise to bring back blue-collar factory jobs.