News

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.

To secure the stable, diversified critical materials supply chains that the U.S. needs to remain globally competitive and achieve energy dominance, changes must be made to the 2026 Energy Critical Materials Assessment, the NAM said today.

What’s going on: “Manufacturers in America utilize critical materials and minerals extensively, deploying them in a wide array of manufactured products throughout the U.S. economy,” NAM Vice President of Domestic Policy Chris Phalen told the Department of Energy in response to a request for information seeking public input on the assessment.

• The NAM recommended the DOE take certain steps regarding the assessment, including adding certain materials to its list and ensuring others remain on it. It also urged the DOE to collaborate with other agencies and Congress to “streamline permitting processes to ensure greater domestic access to these materials.”

Other actions: The NAM also urged the DOE to:

• Maintain “the critical materials that are currently listed within the DOE’s Energy Critical Materials Assessment,” including aluminum, cobalt, copper, electrical steel, lithium and graphite;
• Add iron nitride and zirconium to the assessment;
• Remove permitting barriers that are “restricting the United States from being able to mine, process and access domestic resources, modernize infrastructure and shore up supply chains”;
• Offer financial tools—including investment tax credits, production tax credits and grants—to help “de-risk technological advancement”;
• Align the DOE’s critical materials list with the U.S. Geological Survey’s separate critical minerals list; and
• Add fluorine to the USGS list.

The final say: These recommendations will “ensure [that] manufacturers of all sizes and in all segments of the industry have access to the materials necessary for modern, innovative manufactured products,” Phalen continued.

• They will also allow manufacturers to do what they “do best—put more Americans to work, more factories into motion, more innovation into the marketplace and more investments into our communities while strengthening the hand of the United States on the world stage.”

The federal government has agreed to fast-track some power project requests by U.S. grid operators, potentially staving off electricity shortfalls from an overloaded grid (POLITICO Pro, subscription).

What’s going on: Last week, the Federal Energy Regulatory Commission issued unanimous orders “conditionally authorizing requests from the Midcontinent Independent System Operator (MISO) and Southwest Power Pool (SPP).”

• The move follows a similar approval for an expedited interconnection process for PJM Interconnection, the largest power grid in the U.S.
• It also comes just months after FERC rejected a similar request from MISO.

Why it’s important: The MISO and SPP plans seek to get new projects online quickly as some traditional power plants are closed “and replacements are stuck awaiting studies for approval to plug into the bulk power grid.”

• Utilities have signaled that they need more generation to account for growing power appetite, much of it stemming from the rapid construction of capacity-hungry data centers.

What’s new this time: Although FERC said in May that MISO’s expedited resource adequacy study process was too broad and therefore risked worsening the “existing interconnection queue delays,” the revised proposal, submitted in June, caps at 68 the number of ERAS endeavors in coming years.

• The revised proposal also adds new eligibility requirements.
• And “projects seeking expedited grid studies must have approval of the appropriate local regulator, control the site for the project and have a contracted buyer as well as pay a $100,000 application fee and meet other conditions.”

Two manufacturing leaders testified at House Ways and Means Committee field hearings in Nevada and California this past weekend.

• Click Bond Director of Manufacturing Austin Robinson testified on Friday in Las Vegas, focusing on the impacts of the One Big Beautiful Bill’s tax provisions for the manufacturing workforce.
• On Saturday, Robinson Helicopter Company Vice President of Business Development Will Fulton testified alongside NAM President and CEO Jay Timmons at the Ronald Reagan Presidential Library, where they discussed the impacts of the tax provisions for manufacturers. (In case you missed it, here is our article from yesterday on Timmons’ testimony.).

Click Bond: Austin has spent his career in manufacturing. He now manages the 80% of employees who make up the manufacturing workforce at Click Bond, which designs, manufactures and supports adhesive bonded fasteners that are used in space, aviation, marine and other applications, both civil and defense.

• After Austin thanked policymakers for passing the One Big Beautiful Bill Act, he explained what it means for his company. “2017 tax reform was tremendously impactful for both our business and our workers,” he said. “It allowed us to increase wages, scale up our engineering and development workforce, invest in next-generation equipment and create a new employee academic assistance program.”
• “[By] making permanent a pro-growth tax code, the One Big Beautiful Bill will empower us to continue and expand these investments, to purchase more equipment and conduct more research and to further increase pay and benefits for our employees.”

Investing in workers: Austin emphasized that the bill will allow manufacturers to keep investing in workers, building on the pay increases Click Bond was able to provide to their hourly employees following the Tax Cuts and Jobs Act.

• “My first employer paid for my education, and I am proud to say that Click Bond does the same for any employees who want to go back to school and develop their skill,” he said. “Our workforce at Click Bond is the most precious resource, and that is reflected in the investments that we make in them. Those investments are actually enabled by a pro-growth tax policy.”

Robinson Helicopter: Will also thanked policymakers for this legislation.

• Robinson “specializes in helicopter design, assembly, inspection, flight testing, manufacturing and production. … Our Torrance, California, manufacturing facility is the world’s leading commercial helicopter manufacturer, period,” he told policymakers.
• “The One Big Beautiful Bill Act supports [Robinson] by driving our ability to accelerate domestic investment expansion and growth. … This legislation helps accelerate our ambitions into a more near-term reality.”

R&D support: “These tax provisions help us to invest both in the design of new technology and its production processes,” Will added. “We recently launched our newest helicopter, the R88, which offers more robust first responder capabilities.”

• “Our R&D efforts for the R88 include the ability to fit that helicopter with more advanced technology and equipment for firefighting, disaster response and emergency medical services. That helicopter will act as an operational control center to a fleet of fire surveillance drones to better scan for any signs of ignition, ensure faster response times and expand the capacity of fire departments to contain fires earlier.”
• “Thanks to your leadership, Congress and the administration have empowered Robinson Helicopter to create jobs, invest in equipment, innovate through R&D and drive economic growth faster,” he concluded.

The litigation of the Biden administration’s limits on per- and polyfluoroalkyl substances in drinking water will resume this fall (POLITICO’s GREENWIRE, subscription). The NAM and other industry groups are leading the challenge against these standards, contending that they are unachievable and rely on invalid cost-benefit analyses.

What’s going on: In a court filing last week, the Environmental Protection Agency “said it and the … industry groups challenging the standards need until Aug. 1 to come up with a schedule for additional briefing, which was suspended earlier this year while EPA considered what to do.”

• In May, EPA Administrator Lee Zeldin announced that the agency would rescind and rework the standards for some substances while continuing to defend the equally unworkable standards for PFOA and PFOS.

A two-pronged strategy: While the NAM and its allies are awaiting the resumption of the court case, the NAM’s experts are pressing the administration to reconsider the standards for all six substances, including PFOA and PFOS. This week, they urged the EPA and the National Drinking Water Advisory Council to revise the PFAS National Primary Drinking Water Regulation.

• “The NAM supports health-protective and science-based safe drinking water standards. Manufacturers continue to innovate ways to protect the environment and our communities,” said NAM Managing Vice President of Policy Charles Crain. “The EPA’s [maximum contamination level] standards should encourage such innovation while setting attainable limits that water systems can realistically finance and meet. ”
• “Manufacturers support rational regulation of PFAS that allows manufacturers to continue supporting critical industries, while developing new chemistries and minimizing any potential environmental and public health impacts.”
• “Certain PFAS uses remain essential to the functionality and safety of products that underpin modern life, from semiconductor fabrication and advanced energy storage to lifesaving medical devices and aerospace systems, where no technically viable substitutes exist and are estimated to be decades out. PFAS regulations require a measured and evidence-based approach that the 2024 Final PFAS NPDWR lacks.”

In-person appearance: The NAM also reiterated manufacturers’ concerns to the EPA and the National Drinking Water Advisory Council in a public meeting on Monday.

• “[R]ules that are not feasible, cost effective or adequately supported by robust scientific analysis don’t just strain water systems, they cascade through water rates, capital plans, liability frameworks and ultimately the competitiveness of U.S. manufacturing,” NAM Director of Chemicals Policy Reagan Giesenschlag said.
• “In a time of fragile supply chains, regulations that unintentionally push manufacturing offshore or stall investments in innovation are devasting and at odds with the President’s America First priorities.”

What to watch: The NAM will continue its advocacy directed at the federal agencies, while appearing again in court once those proceedings resume. There it will argue that the government’s cost-benefit and feasibility analyses are irretrievably flawed and violate both the Safe Drinking Water Act and the Administrative Procedure Act.