U.S. manufacturing sees growth but faces mixed signals

In June 2025, American manufacturing activity showed signs of improvement, according to the S&P Global U.S. Manufacturing Purchasing Managers' Index (PMI), which rose to 52.9, indicating expansion. This marked the highest level for the PMI in over three years after it had previously recorded a lower figure of 52.0 in May. The report highlighted a growth in manufacturing output that had not been seen since February, largely driven by an increase in new orders from both domestic and export markets. Furthermore, employment rates in the manufacturing sector rose at the fastest pace since September 2022, suggesting a recovery in hiring as manufacturers responded to the increased demand for their products. The report from S&P Global contrasted sharply with findings from the Institute for Supply Management (ISM), which noted that its Manufacturing PMI stood at 49.0, indicating a continued contraction in the sector for the fourth consecutive month. Though ISM reported a slight rebound in production levels, it pointed out declines in new orders and backlogs, along with a concerning fall in the employment index to 45.0, which signals ongoing job losses within the industry. While manufacturers appear to experience higher workloads, there remains a sense of caution due to fluctuations in customer demand and trade policies. Rising prices also emerged as a central theme in the reports, primarily driven by tariffs affecting metals. As the S&P Global report indicated, input costs rose at their fastest rate in nearly three years, prompting many firms to increase their output prices to maintain profitability. Similarly, ISM's prices index reflected elevated cost pressures, remaining high at 69.7. The conflicting viewpoints from both survey sources reveal an uneven recovery across the manufacturing landscape, suggesting while some areas flourish, others continue to struggle. Despite the apparent challenges, many manufacturers expressed growing optimism. Chris Williamson, chief business economist at S&P Global, highlighted an improvement in business confidence following a low point observed in April amidst tariff concerns. The sentiment shift may be attributed to stabilized export demand and a gradual easing of trade-related anxieties. However, the disparities in responses from S&P and ISM underline the complexities of the recovery process, as differing methodologies and sample selections paint contrasting pictures of the manufacturing environment. Moving forward, the sustainability of production improvements will depend significantly on how inflationary pressures evolve and the predictability of trade policies, particularly as some industry sectors face strong contractions and customer hesitancy remains prevalent.