U.S. manufacturing expanded at its fastest pace in over four years, with the July ISM® Manufacturing PMI® rising to 55.6%, its highest reading since May 2022. Growth was driven by stronger new orders, surging production, rising employment, and slower supplier deliveries, all signaling accelerating momentum across the industrial economy.
Why July Marked a Major Acceleration in U.S. Manufacturing
The July PMI® reading of 55.6% reflects the seventh consecutive month of expansion and a sharp improvement over June’s 53.3%. This is the strongest performance since May 2022, when the index reached 55.9%.
The July surge represents the fastest manufacturing growth in more than four years, driven by broad‑based improvements across key subindexes.
New Orders, Production, and Employment All Strengthened
Every major component of the PMI® moved in a positive direction:
New Orders — 56.7% (Growing Faster)
New orders expanded for the seventh straight month, rising 0.7 points from June.
Production — 58.5% (Strongest Since November 2021)
Production jumped 6.3 points, the largest gain among all subindexes, reaching its highest level since late 2021.
Employment — 52.8% (First Expansion in 33 Months)
Employment moved back into growth territory for the first time in nearly three years, with 60% of survey panelists reporting active hiring.
Supplier Deliveries — 58.9% (Slowing Faster)
Slower deliveries indicate rising demand and busier supply chains.
Inventories — 51.2% (Growing Slightly)
Inventories remained in expansion, though at a slower pace.
Industry Participation: 15 Sectors Reported Growth
Fifteen manufacturing industries expanded in July, including:
- Printing & Related Support Activities
- Apparel, Leather & Allied Products
- Electrical Equipment, Appliances & Components
- Primary Metals
- Nonmetallic Mineral Products
- Transportation Equipment
- Machinery
- Computer & Electronic Products
- Plastics & Rubber Products
- Fabricated Metal Products
This breadth of growth indicates strong demand across both durable and nondurable goods.
What Survey Panelists Are Saying
There is optimism and caution among respondents:
- Positive: Semiconductor, AI, advanced packaging, and high‑performance computing markets are driving strong sales and investment.
- Negative: Pricing volatility in metals and tariff uncertainty remain major concerns.
Despite mixed sentiment, the overall PMI® signals robust expansion.
What July’s PMI® Means for the U.S. Manufacturing Economy
- Fastest Growth in Over Four Years
The PMI® hit its strongest level since May 2022, signaling accelerating momentum.
- Broad‑Based Expansion Across Subindexes
Four of the five core components expanded, with inventories only slightly lower.
- Hiring Is Finally Rebounding
Employment expansion after 33 months of contraction suggests improving labor conditions.
- Demand Is Strengthening Across Key Sectors
New orders and production increases point to strong Q3 activity.
- Some Risks Remain
Pricing volatility, geopolitical concerns, and tariffs continue to create uncertainty.
Key Takeaways
- July’s ISM® Manufacturing PMI® hit 55.6%, the fastest growth in more than four years.
- New orders, production, and employment all strengthened significantly.
- Supplier deliveries slowed, indicating rising demand.
- Fifteen industries reported growth, showing broad sector strength.
- Pricing volatility and tariff concerns remain headwinds.
FAQ
Why is the July PMI® significant?
It marks the fastest U.S. manufacturing expansion in over four years.
Which subindex improved the most?
Production, which jumped 6.3 points to 58.5%.
Is manufacturing employment improving?
Yes, employment expanded for the first time in 33 months.
Are manufacturers concerned about anything?
Yes, pricing volatility, geopolitical tensions, lead times, and tariffs remain challenges.
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