• US May ISM Manufacturing Index was 52.1, falling unexpectedly, trailing significantly consensus of 53, and down from 52.8 in April
  • Despite the drop, the index remain in expansion territory and respondents report “overall sentiment remains primarily positive
• Analyst roundly agree the trade tensions with China are weighing on manufacturing in the US and these data are the result
• Three of 5 components posted drops in the latest readings, including production dropping to 51.3, the lowest reading since May 2016
• A separate manufacturing gauge, the HIS Markit US Manufacturing PMI, fell to 50.5 in May, it’s lowest level in over a decade
  • Weak clients demand drove the drop, respondents reported
• The weak manufacturing reading comes on the same day IHS Markit Global PMI fell to 49.8 in May, below the expansion level of 50
• The weak data in the US comes in the wake of similar readings around the globe
  • UK Manufacturing PMI dropped to 49.4 in May
  • China Manufacturing PMI dropped to 49.4 in May as well
  • South Korea Manufacturing PMI dropped to 48.4 in May 
• Near term, developments in the trade war will drive sentiment-as most believe this could be protracted trade war with China, further drops in sentiment are possible
   

More on the trade war with China

• On China's White Paper: It was you! China publishes white paper, pointing finger as US for causing trade tension
• On China's own blacklist: You have your blacklist, we'll make ours! China creating list of "unreliable entities" from the US, saying "Necessary means will be taken"
• On weaponizing rare earth metals: Don't Say I Didn't Warn You: Chinese State Media Threatens US with a Big Rare Earth Metals Stick