News

In July, the U.S. manufacturing sector contracted for the fourth straight month, with the Manufacturing PMI dropping to 46.8%, a 1.7 percentage point decrease from June’s 48.5%. Following a brief expansion in March, the sector has been contracting at an increasing rate, and none of the six largest manufacturing industries reported growth.

The New Orders Index contracted for the fourth consecutive month to 47.4%, a 1.9 percentage point drop from June. (A New Orders Index above 52.3% generally aligns with growth in manufacturing orders.) The index has not shown consistent growth since a 24-month expansion streak ended in May 2022. Among the six largest manufacturing sectors, only computer and electronic products and chemical products saw increased new orders.

The Production Index stayed in contraction, hitting 45.9%, down 2.6 percentage points from June. None of the six largest manufacturing sectors reported increased production. This marks the index’s lowest performance since May 2020. According to panelists, companies significantly reduced output levels compared to June, with weak new order rates and declining backlog levels. Due to economic uncertainty, companies are also avoiding inventory investments.

The Employment Index dropped 5.9% from June to 43.4%, reaching its lowest level since June 2020. None of the six largest manufacturing sectors reported employment growth in July. Companies continued reducing their workforce through layoffs, attrition and hiring freezes.

The Prices Index rose 0.8% from June to 52.9%. Raw material prices rose for the seventh consecutive month after eight months of declines. The index’s expansion rate was faster than the previous month, and commodity prices remain volatile. In July, 23% of companies reported higher prices, compared to 20% in June.