News

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.

Alongside the president’s AI Action Plan and subsequent directive encouraging the buildout of AI data centers, President Trump signed another executive order aimed at exporting American AI technology.

• The NAM is seeking manufacturers’ opinions on how this EO should be implemented.

The big picture: The goal of the EO is to “preserve and extend American leadership in AI and decrease international dependence on AI technologies developed by our adversaries by supporting the global deployment of United States–origin AI technologies.”

• It orders the creation of an American AI Exports Program, which allows AI companies to seek federal support in competing for business deals abroad.
• An interagency body called the Economic Diplomacy Action Group, chaired by the Secretary of State, will help facilitate foreign commercial deals, using both diplomacy and financing tools.

Full-stack: Most notably, the EO mandates that any “consortium” seeking federal support must be exporting “full-stack AI technology packages,” not just individual products or services (hence the assumption that many companies will band together to make one proposal).

• “AI-optimized computer hardware (e.g., chips, servers and accelerators), data center storage, cloud services and networking, as well as a description of whether and to what extent such items are manufactured in the United States”
• “Data pipelines and labeling systems”
• “AI models and systems”
• “Measures to ensure the security and cybersecurity of AI models and systems”
• “AI applications for specific use cases (e.g., software engineering, education, health care, agriculture or transportation)”

Preference for U.S. sources: The EO says that proposals whose hardware, storage, cloud and networking components are “manufactured in the United States” will receive preferential treatment, though this is not a hard requirement.

• However, other components of the “stack,” from data pipelines to cybersecurity, don’t carry this proviso.

Feedback wanted: Please contact NAM Senior Director of Technology Policy Franck Journoud ([email protected]) or NAM Manager of International Policy Ellie Leontis ([email protected]) to provide your thoughts on this EO.

Environmental Protection Agency Administrator Lee Zeldin on Tuesday announced that the agency is proposing to rescind its 2009 “endangerment finding” that concluded that greenhouse gas emissions endanger public health and welfare. The finding underpins most U.S. regulations to address climate change.

• The proposed rule, if finalized, would result in there being no greenhouse gas standards for any vehicle of any model year.

The background: The EPA administrator is proposing to withdraw the finding by asserting the EPA lacks the authority under Section 202 of the Clean Air Act to do so, that the Supreme Court case that precipitated the finding has been superseded by recent court cases, such as West Virginia v. EPA and Loper Bright Enterprises v. Raimondo, and that the EPA is acting in accordance with President Trump’s “ Unleashing American Energy” Executive Order, which called for a reexamination of the 2009 standard, among other actions.

• The EPA is basing this announcement on an updated study of climate science by the Department of Energy.
• In a press release, the EPA claimed that this endangerment finding “has been used to justify more than $1 trillion in regulations. …”

Other actions: As part of the EPA’s announcement, the agency is also proposing to rescind the Biden administration’s vehicle tailpipe regulations for light, medium- and heavy-duty vehicles.

• Additionally, the EPA announced last month that it plans to repeal the previous administration’s power plant regulations, a move that “is a critical and welcome step toward rebalanced regulations and American energy dominance,” NAM President and CEO Jay Timmons said at the time.

Feedback needed: Once the proposed rule is published in the Federal Register, the 45-day public comment period will begin. The NAM will be submitting comments on this proposed action and is seeking feedback from NAM members.

• Please contact NAM Director of Energy and Resources Policy Michael Davin ([email protected]) or NAM Vice President of Domestic Policy Chris Phalen ([email protected]) to provide your thoughts.

President Trump imposed a Section 232 tariff of 50% on semifinished copper and certain derivatives by presidential proclamation yesterday.

The reasoning: The proclamation cites Commerce Department findings that foreign competitors have used “state subsidies and overproduction” to outcompete domestic U.S. suppliers and that dependence on foreign sources has created “strategic vulnerabilities and jeopardizes the U.S. defense industrial base.”

What’s in scope: This proclamation does not list specific products, but a White House fact sheet describes the scope broadly as:

• Semifinished copper products like copper pipes, wires and sheets; and
• Copper-intensive derivative products like pipe fittings, cables and electrical components.

What’s not in scope: According to the White House fact sheet, copper input materials such as copper ores, concentrates, mattes, cathodes and anodes and copper scrap are not subject to 232 “or reciprocal tariffs.” Customs and Border Protection guidance will be critical to understanding this aspect of the proclamation.

Timing: The tariff goes into effect on Friday, Aug. 1.

Going forward: The proclamation directs the Commerce Secretary to establish a process within 90 days to consider adding derivative copper products to the scope of the tariff, similar to the process established for aluminum and steel.

• The Department of Commerce will also monitor imports of copper and derivatives going forward and will “from time to time” inform the president of further necessary action.

Domestic use: This proclamation invokes the Domestic Production Act to authorize the Commerce Secretary to require a certain percentage of U.S.-produced inputs be sold in the U.S. According to the fact sheet, this includes requirements that:

• 25% of high-quality copper scrap produced in the U.S. be sold in the U.S. to “improve access to this important feedstock for domestic fabricators and secondary refiners”; and
• 25% of copper input materials produced in the U.S. be sold in the U.S. by 2027, increasing to 30% in 2028 and 40% in 2029.

Brazil: Meanwhile, the president also released an executive order yesterday imposing an increased International Emergency Economic Powers Act tariff on imports from Brazil, citing concerns about violations of free expression rights and human rights in that country, as well as the “political persecution” of Brazil’s former president.

50%: The July 30 EO imposes an additional 40% tariff to be stacked with the 10% IEEPA “reciprocal” tariff issued on April 2, bringing the IEEPA tariff to 50%.

• This adjustment will go into effect seven days after the EO (not including the day itself).

Exemptions and adjustments: The EO includes a list of products not subject to this increase and also states that if a Section 232 tariff applies to the goods, the IEEPA tariff will not apply.

Going forward: As previewed in the president’s letter, the EO states that should Brazil retaliate, the U.S. tariff will be increased by the same amount.

• This EO directs the Secretary of State to monitor and recommend any additional actions under IEEPA.

The NAM is urging the EPA to move forward with a proposed rulemaking that would allow the Railroad Commission of Texas “to issue and enforce compliance with [Underground Injection Control] Class VI permits for injection wells used for geologic carbon sequestration.”

• Due to manufacturers’ concern for environmental stewardship, the NAM is a strong proponent of measures that will mitigate emissions, NAM Vice President of Domestic Policy Chris Phalen told the agency.
• “Manufacturers view clean energy solutions, such as carbon capture and sequestration/storage technologies, as important parts of our country’s energy present and future, and manufacturers are leading the charge in developing them and scaling them up for widespread use.”

A quick review: The CCS process is made up of three steps: capturing the carbon dioxide; transporting by pipeline, road or ship; and injecting it far below ground for permanent storage.

• “Industries across the United States are investing substantially in CCS to decarbonize their operations and produce more sustainable products. In Texas, these projects have the potential to contribute $1.5 billion to the Texas economy and create 7,500 full-time, high-paying jobs,” the NAM noted.

State empowerment: Allowing states to permit permanent sequestration via the EPA’s Class VI injection well program would be a huge step forward for CCS across the country, as states are far more aware of their own geologies than is the federal government.

• State primacy in permitting would represent a victory for the Trump administration’s (and the NAM’s) push to streamline permitting across the federal government and jumpstart much-needed energy, infrastructure and related projects.

The last word: “Granting state primacy to Texas and other states will help create jobs, grow investment in manufacturing and pave the way for energy solutions that will support the United States’ 21st-century economy,” concluded Phalen.