General

The S&P Global Flash U.S. Manufacturing PMI slipped from 52.9 to 49.5 in July, a seven-month low and below the 50-point marker that signals growth in business conditions. Factory production slowed as new orders fell for the first time this year, being adversely impacted by declines in export orders. Inventories dropped as manufacturers started utilizing some of their holdings that they stockpiled in May and June. Meanwhile, supplier delivery times quickened due to reduced pressure on supply chains. Input costs rose at the second-fastest pace since January 2023 but cooled slightly from June’s post-pandemic peak. Meanwhile, manufacturers’ selling prices grew at the second highest rate since November 2022. Nearly two-thirds of manufacturers linked rising input costs to tariffs, while just under half of respondents linked increased selling prices to tariffs.

Overall business activity rose to a seven-month high, rising from 52.9 in June to 54.6 in July. This growth was isolated mainly to the services sector, wherein business activity rose at the highest rate so far this year, while the manufacturing sector grew more sluggish, making overall growth uneven across the economy. In fact, overall new order growth picked up, with new service sector business more than offsetting a slight drop in factory orders. As seen in manufacturing, prices also increased sharply in services, rising at the second-steepest pace since April 2023.

Meanwhile, optimism about future business conditions dipped again in July, reflecting fears about tariffs and cuts to state funding following federal government policy changes. Even in manufacturing responses, any perceived benefits of import tariffs are outweighed by anxieties about higher prices.