Manufacturing PMI Reaches 49-Month High, but Factory Hiring Drops

The S&P Global Flash U.S. Manufacturing PMI rose for the 11th consecutive month from 55.1 to 55.7 in June, a 49-month high. Factory production improved at its fastest rate since July 2021, while new orders growth saw the largest rise since April 2022. Meanwhile, manufacturing employment saw its largest decline since May 2020 amid concerns over rising input costs.

Inventories increased in June as the stock of factory inputs rose at its fastest pace since May 2025 and the second steepest rate in survey history. At the same time, supplier delivery times lengthened to the greatest extent since August 2022, with respondents continuing to report that war-related shipping disruptions and stockpiling are exacerbating supply constraints. Despite manufacturers’ input cost inflation moderating from a recent peak in May, input and selling prices remained elevated. Overall, price increases continued at the same rate as in May for manufacturers as well as the service industry, which has been the highest rate since July 2025.

Overall business activity increased in June, moving up from 51.5 to 52.2. Further, the growth rate in the services sector improved, rising to a four-month high. Overall, new orders growth accelerated as companies continue to build up safety stock. Employment fell for the second consecutive month due to concerns over rising costs and a sharp drop in manufacturing headcounts.

Meanwhile, manufacturers’ optimism about future business conditions rose in June to the highest level since February. At the same time, service sector optimism also improved in part due to hopes of an easing of supply disruptions and price pressures. Despite the gain, sentiment remained below long-run averages amid war-related disruptions and tariff policies.