News & Insights

In May, the S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index recorded a 2.3% annual gain, down slightly from 2.7% in April. The 10-City Composite saw an annual increase of 3.4% in May, down from 4.1% the previous month, while the 20-City Composite rose 2.8% year-over-year, down from 3.4%. Among the 20 cities, New York again posted the highest annual gain at 7.4%, followed by Chicago at 6.1% and Detroit at 4.9%. Tampa again recorded the lowest annual return, with prices falling 2.4%.

On a month-over-month basis, the U.S. National Index as well as the 10-City and 20-City Composites all increased 0.4% before seasonal adjustment. Meanwhile, after seasonal adjustment, the National Index posted a decrease of 0.3%, and the 10-City and 20-City Composites also dropped 0.3%. This marks the third consecutive month of seasonally adjusted declines for the National Composite Index.

Even while most cities registered nominal gains, only four cities—Cleveland, Minneapolis, Charlotte and Tampa—showed month-over-month acceleration. As they have for all of 2025, the Midwest and Northeast continue to lead price growth, while the Western region posted small or negative gains over the month. Cities that saw pandemic highs but now experience persistent weakness include Los Angeles (up 1.1%), San Diego (up 0.4%), Phoenix (up 0.9%) and San Francisco (down 0.6%).

Affordability and inventory are still constrained, and home prices are holding steady—for now. Seasonal momentum is weaker than expected and impacted by higher mortgage rates. The market is recalibrating in response to strained financial conditions, subdued transaction volumes and increasing local dynamics.

Consumer confidence increased 2.0 points in July to 97.2. The Consumer Confidence Index stabilized following June’s decline but remains below the confidence level one year ago. Among its components, the Present Situation Index declined slightly, while the Expectations Index improved, with consumers’ pessimism about the future receding some.

The Present Situation Index, reflecting current business and labor market conditions, fell 1.5 points to 131.5. Meanwhile, the Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, rose 4.5 points to 74.4, still below the recession signal threshold of 80.

Views of the current labor market situation are still poor, with 30.2% of consumers saying jobs were “plentiful,” up from June (29.4%), while 18.9% said jobs were “hard to get,” up from 17.2% the prior month and from 14.5% in January. Looking to the future, 25.4% anticipate fewer available jobs in the next six months, down slightly from 25.7% the prior month.

Mentions of tariffs were still prevalent in written responses, with consumers expressing fears they will lead to higher prices. Additionally, mentions of high prices and inflation rose in July, despite consumers’ 12-month inflation expectations easing to 5.8% from 5.9% in June and 7.0% in April. Meanwhile, 53% of consumers, compared to 57.1% in June, expect interest rates to rise, and more consumers (21.2% vs. 18.4% in June) expect rates to fall. While mentioned by a few respondents, the positive economic potential of the Big Beautiful Bill remained low on the list of consumers’ written responses in July.

Buying plans for cars and homes declined in July but were stable on a six-month moving average basis. Consumers’ plans for buying big-ticket items were mixed in July, especially for appliances, but plans to buy electronic goods increased slightly. Overall, consumers’ views of their current and future financial situation deteriorated slightly from June but remained solid overall.

In July, Texas factory activity rose markedly following a decline in June. The production index jumped 20 points to 21.3, the highest reading in three years. Meanwhile, other measures were mixed. The new orders index remained negative at -3.6 but advanced nearly four points. On the other hand, capacity utilization and shipments jumped into positive territory, to 17.3 and 2.7, respectively.

Perceptions of manufacturing business conditions improved in July, with the general business conditions index climbing nearly 14 points to 0.9 and the company outlook index leaping nearly 14 points to 4.7, the first positive reading in six months. Meanwhile, the uncertainty index, alternatively, declined four points to 11.2. The series average is 17.2.

Labor market indicators suggested an increase in headcounts and longer workweeks in July, with the employment index rising 2.7 points to 8.4, while the hours worked index climbed back into positive territory to 7.7 from -8.4. More than 17% of firms reported net hiring, while a smaller percentage (9.0%) noted net layoffs.

Historically high upward pressure on prices eased in July, while wage growth remained relatively stable. The prices paid for raw materials index decreased slightly, from 43.0 to 41.7. Meanwhile, the prices received for finished goods index dropped 15 points to 11.1. The wages and benefits index remained largely unchanged at 13.2 and stayed below the series average of 21.1.

The outlook for future manufacturing activity strengthened from June, with the future production index rising from 22.6 to 30.3. Furthermore, the future general business activity index and the future company outlook index both improved, rising to 19.0 and 21.6, respectively.

As anticipated, the Federal Open Market Committee maintained its interest rate target range at 4.25%–4.50% at its July meeting. In a change to its previous statement, the FOMC noted that the growth of economic activity has moderated in the first half of the year. Unlike the June decision, which was unanimous, two FOMC members, Christopher Waller and Michelle Bowman, dissented, desiring to lower the target range by 25 basis points.

In the press conference following the meeting, Federal Reserve Chairman Jerome Powell noted that, despite heightened uncertainty, the economy remains in a solid position and the FOMC is well positioned to respond in a timely way to potential economic developments. Chairman Powell also noted that the underlying composition of price changes has shifted, with increased tariffs pushing up prices in some categories of goods.

The FOMC’s summary of economic projections, which maps out the Federal Reserve’s expectations for where interest rates may be headed in the future, generally is released in conjunction with every other FOMC meeting. Since the June meeting included a release of economic projections, there was not a release in conjunction with the July FOMC meeting. The June summary signaled a marginally more hawkish stance than the March summary. Seven Federal Reserve officials project there will be no rate cuts in 2025, while eight anticipate 50 basis points worth of cuts across 2025. Furthermore, the projections show officials expect inflation and unemployment to rise more than they expected in March.

Real GDP increased at an annual rate of 3.0% in the second quarter of 2025, up from a 0.5% decline in the first quarter and above consensus expectations of slightly weaker growth. In the first half of the year, real GDP grew at an annual rate of 1.2%. The increase in GDP during the second quarter was mostly reflective of a decrease in imports, which plummeted 30.3%, and a rise in consumer spending. This was partially offset by reductions in investment, exports and federal government spending. Since, by definition, GDP measures domestic output, imports are subtracted from the final calculation since they are reflected in other parts of the equation, such as inventories and consumption.

Consumer spending grew at an annual rate of 1.4%, up from a 0.5% increase in the first quarter, with both spending on goods (up 2.2%) and services (up 1.1%) contributing to the gain. Consumer spending on durable goods climbed 3.7% after exhibiting a significant downturn of 3.7% in the first quarter. The rise in consumer spending was driven by motor vehicles and parts, with slight declines in other durable goods categories. Meanwhile, consumer spending on nondurable goods rose 1.3%, down from 2.1% growth in the first quarter. Within services, spending increases were relatively widespread, albeit weak, with health care and food services and accommodations being the largest contributors to the gain.

Investment tumbled 15.6% at an annual rate in the second quarter, after surging 23.8% in the first quarter. The plunge was driven by a 10.3% decrease in business spending on structures. Meanwhile, business spending on equipment rose 4.8%. Exports dropped 1.8% in the second quarter, with the decline entirely concentrated in goods exports (down 5.0%). The decrease in federal government spending (down 3.7%) was led by an 11.2% reduction in nondefense spending, while defense spending rose 2.2%. Overall, government spending inched up at an annual rate of 0.4% in the second quarter, boosted by a rise in state and local spending (up 3.0%).

The S&P Global U.S. Manufacturing PMI was 49.8 in July, down considerably from the June reading of 52.9 and the first contraction after six consecutive months of growth. New orders effectively stagnated, growing at the slowest pace seen all year, with uncertainty created by tariffs leading to hesitancy in committing to new orders. Weak sales resulted in production growth softening from June. Tariffs led to steep increases in both input and output costs in July, but the pace of increase slowed from June. Despite easing, selling prices rose at the second-sharpest rate since November 2022.

Diminished international demand led to new export orders declining for the first time in three months, with weaker sales notes in China, the European Union and Japan. As the need to front run tariffs waned, factories noted reduced inventory of both raw materials and finished goods in July. As anticipated, because inventory growth rose at such a steep pace to protect against supply-side disruptions from tariffs, that growth has slowed, and firms started utilizing their stock holdings rather than sourcing new inputs.

Meanwhile, federal policies weighed on business confidence, but firms are still hopeful that output will improve in a year’s time, which appears to be hinged largely on a resolution of tariff uncertainty. As manufacturers face lower demand, firms reduced employment levels, the first net reduction since April. Meanwhile, weak new orders led to backlogs of work falling in July after increasing slightly the prior month.

In July, global manufacturing activity fell back into contraction territory, dropping from 50.4 to 49.7. Output and new orders also dropped back into contraction in July after expanding in June. New export orders continued to decline and at a faster pace than the prior month. After businesses frontloaded in advance of increased tariff rates in the first half of the year, global manufacturing stalled in July amid reduced demand due to tariffs and an unwind of the previously frontloaded production.

India, Ireland, Vietnam and Spain had the highest PMI readings in July. On the other hand, China, the U.K., Brazil, Mexico and the U.S. were some of the larger nations to register declines in activity. The modest downturn in manufacturing output was seen across the consumer, intermediate goods and investment goods categories.

Additionally, manufacturing employment fell for the 12th consecutive month in July and at a faster rate. Although staffing levels sank in the U.S., China and Eurozone, they rose in Japan, India and Brazil. Meanwhile, price pressures remained relatively stable, with developed nations experiencing sharper increases in both input and output costs than emerging nations.

Job openings for manufacturing decreased by 10,000 to 415,000 in On the other hand, the May job openings level of 425,000 was revised upward from 414,000 in the previous report. Nondurable goods job openings in June rose by 26,000 to 155,000, while durable goods job openings declined by 35,000 to 261,000. The manufacturing job openings rate stayed the same at 3.2% from May but fell from 3.4% the previous year. The rate for nondurable goods manufacturing advanced 0.5% to 3.1%, while it dipped 0.4% to 3.2% for durable goods.

In the larger economy, the number of job openings dropped to 7.4 million, a decrease of 275,000 from the previous month but an increase of 25,000 from the previous year. The job openings rate declined to 4.4%, down from 4.6% in May and 4.5% last year. This data reflects an overall labor market that has eased back to pre-pandemic levels, but remains relatively tight from a historical perspective.

The number of hires in the overall economy decreased 261,000 to 5.2 million in June but increased 116,000 from the previous year. The hires rate for the overall economy inched down 0.1% in June to 3.3%. Meanwhile, the hires rate for manufacturing ticked up 0.1% in June to 2.3%. The hires rate for durable goods similarly increased 0.1% to 2.1%, while the hires rate for nondurable goods stayed the same at 2.5%.

In the larger economy, total separations, which include quits, layoffs, discharges and other separations, decreased 153,000 from May to 5.1 million and 4,000 from the previous year. The total separations rate edged down 0.1% to 3.2% for the overall economy but rose 0.2% for manufacturing to 2.4%. Within that rate, layoffs and discharges decreased by 5,000 in June for manufacturing, while quits increased by 24,000. The quit and layoff rates continue to remain lower for manufacturing than the total nonfarm sector.

In July, the U.S. manufacturing sector contracted for the fifth consecutive month and at a faster pace than the prior month, with the ISM Manufacturing^® PMI decreasing to 48.0% from 49.0% in June. On the other hand, demand indicators improved in July, with the New Orders and Backlog of Orders Indexes contracting at a slower pace, rising to 47.1% and 46.8%, respectively. Meanwhile, the New Export Orders and Employment Indexes contracted at a faster pace, falling to 46.1% and 43.4%, respectively. Inventories (48.9%) also contracted at a slightly faster pace, as companies worked to adjust inventory to better align with demand. On the other hand, the Production Index increased at a faster pace, rising from 50.3% to 51.4%.

The New Orders Index contracted for the sixth consecutive month but at a slightly slower pace than the prior month, a 0.7 percentage points rise from June. The index hasn’t shown consistent growth since a 24-month streak of expansion ended in May 2022. Of the six-largest manufacturing sectors, none reported an increase in new orders. Respondents noted continued weak demand, with the top issue in negotiations between buyers and sellers being which party will pay the tariff costs.

The New Export Orders Index contracted for a fifth consecutive month and at a slightly faster pace, 0.2 percentage points lower than June. The continued contraction is likely indicative of dampened demand amid ongoing trade tensions. Meanwhile, the Imports Index contracted for a fourth consecutive month but at a slightly slower rate, up 0.2 percentage points to 47.6% in July. Imports continue to contract as tariff pricing results in lower demand compared to prior months, resulting in a reduced need to maintain import levels.

The Employment Index contracted for the sixth consecutive month and at a faster pace than the prior month, down 1.6 percentage points from June to 43.4%. Of the six-largest manufacturing sectors, none reported increased employment. Companies continued to reduce headcounts through layoffs, attrition and hiring freezes, while opting for layoffs at an accelerating pace due to uncertainty around near- to mid-term demand. For every mention of hiring, there were two respondents noting reduced headcounts, a wide ratio from a historical standpoint.

The Prices Index decreased 4.9 percentage points to 64.8%, indicating prices for raw materials increased for the 10th straight month in July, but at a slower pace. The increase continues to be driven by the dramatic rise in steel and aluminum prices impacting the entire supply chain, as well as the tariffs applied to most imported goods. More than 35% of companies reported paying higher prices, down substantially from 45.6% in June but still up dramatically from 21% in January.

Nonfarm payroll employment inched up by 73,000 in July, coming in below expectations. Meanwhile, June and May’s job gains were revised downward by a combined 258,000 to 14,000 and 19,000, respectively. The 12-month average stands at 128,000 job gains per month. The unemployment rate increased 0.1% to 4.2%, while the labor force participation rate edged down 0.1% to 62.2%.

Manufacturing employment slipped by 11,000, and the collective job losses in June and May of 14,000 were revised upward by 8,000 jobs to a decrease of 26,000 jobs. Durable goods manufacturing employment stayed the same in July, while nondurable goods employment declined by 11,000. The most significant gain in manufacturing in July occurred in fabricated metal product manufacturing, which added 1,900 jobs over the month. Meanwhile, the most significant losses occurred in beverage, tobacco, and leather and allied product manufacturing, which shed 3,500 jobs over the month, followed by machinery manufacturing, which lost 3,200 jobs.

The employment-population ratio declined 0.1% to 59.6% and is down 0.4 percentage points from a year ago. Employed persons who are part-time workers for economic reasons increased by 219,000 to 4.70 million and are up from 4.56 million in July 2024. Native-born employment is up 383,000 over the month and 1,998,000 over the year. Meanwhile, foreign-born employment is down 467,000 over the month and 237,000 over the year.

Average hourly earnings for all private nonfarm payroll employees rose 0.3%, or 12 cents, reaching $36.44. Over the past year, earnings have grown 3.9%. The average workweek for all employees inched up by 0.1 hour to 34.3 hours but stayed the same for manufacturing employees at 40.1 hours.