The first of this week’s top-tier US macro releases painted an upbeat picture of an economy that, whatever else you want to say about it, isn’t in recession.

The marquee gauge of US factory activity printed ahead of estimates for May, and at 54, now sits at its best levels in four years.

As the figure below reminds you, the long-running US manufacturing recession ended in 2026, at least anecdotally.

May marked the fifth consecutive month during which the ISM headline printed above the 50 demarcation line separating expansion from contraction.

The key production and new orders subindexes were strong. The former came in at 54.3, the latter a robust 56.8. Even the perpetually moribund employment gauge managed to rise handily, albeit while remaining underwater, at 48.6.

“Only 2% of the [manufacturing] sector’s GDP contracted in May,” survey chair Susan Spence said, adding that “all of the six largest manufacturing industries expanded” last month.

As the figure above, from BofA, reminds you, semis “predicted” the ongoing factory recovery. Indeed, to let the SOX tell it, we’re on the verge of a veritable manufacturing renaissance.

Naturally, ISM panelists talked a lot about the war. The anecdotes were littered with references to the Iran conflict.

A remark from someone in the Machinery sector was emblematic. “The Mideast conflict is triggering shipment delays and uncertainties,” the person said. “Elevated gas prices and inflation will surely impact our purchases [but] over the last quarter, we’ve seen increased demand that was unexpected.”

Not surprisingly, the prices index remained very elevated, but at 82.1, it at least receded from April’s multi-year high.

The figure above shows you the marginal abatement in the pervasiveness of rising input costs along with the modest improvement in the above-mentioned employment gauge.

All in all, this release was as good as anyone could’ve expected under the circumstances.

Prices and other war-related uncertainty are a blight, and factory payrolls are anything but stable. And yet, it’d be disingenuous not to acknowledge that the situation on the manufacturing side of the US economy has improved meaningfully in 2026.