U.S. Manufacturing Shows Signs of Growth in June

U.S. manufacturing saw continued expansion in June, as revealed by two surveys published on Wednesday. Price hikes that have burdened the sector for nearly two years now appear to be easing significantly.

The Institute for Supply Management’s manufacturing index for June registered at 53.3, a slight dip from May’s 54.0, but it marks the sixth month of growth. Another index from S&P Global recorded a figure of 53.9, indicating that the economy has been expanding for 11 months.

In both assessments, numbers above 50 signify growth. Economists are particularly attentive to these indices as they offer early indications of economic recovery. This approach relies on real-time feedback from purchasing managers, rather than slower government data.

Even though the growth rate has softened since May, both surveys indicate that new orders and production are still well above historical averages. The ISM’s New Orders Index was at 56, and S&P Global noted that the growth in new orders was still “above trend,” albeit at its slowest rate since March.

“There was noticeable improvement in output and order growth for U.S. manufacturing in June,” commented Chris Williamson, chief business economist at S&P Global Market Intelligence. He noted that the positive momentum, which began with the outbreak of conflict in the Middle East, continues.

Backlogs of orders increased in June, with manufacturers stepping up their purchases of raw materials and components at unprecedented levels. S&P Global indicated that the ISM inventory index turned toward expansion, as stock purchases surged at the fastest rate since May 2025.

Inflationary pressures seem to be lightening. The ISM price index dropped 9.1 percentage points to 73 in June, marking the most significant monthly decline since July 2022. Similarly, S&P Global reported that the growth rate in prices charged by manufacturers has fallen to a three-month low, although costs remain elevated and are decreasing from their peak in May.

Both surveys attribute these improvements to the same underlying factor: decreasing energy prices amid signs of easing tensions in the Middle East. Williamson remarked that these changes are influencing expectations for the upcoming year. However, some manufacturers are exhibiting caution about what lies ahead. Business optimism has dipped to an eight-month low in a related S&P Global survey, with some firms fearing that a slowdown in war-related stockpiling may impact sales as the conflict subsides.

When it comes to employment, the surveys show a significant divergence. S&P Global reported the most considerable drop in manufacturing payrolls in a month since May 2020. In contrast, the ISM employment index improved from 48.6 to 49.7. Though this still implies a contraction, it’s the highest reading in recent months. The ISM noted that, in June, the ratio of manufacturers planning to hire versus those laying off workers was 1.8 to 1, a notable shift from earlier in the year.

A global factory activity index compiled by JPMorgan and S&P Global placed the U.S. sixth among more than 30 countries and territories in terms of manufacturing health. The United States trailed behind the Netherlands, Taiwan, Ireland, Japan, and India, while countries like China, South Korea, Mexico, and the Eurozone scored lower than the U.S. in S&P Global’s assessment.

Export orders emerged as a weak point throughout the reports. The ISM’s New Export Orders Index fell back into contraction at 48.5, and S&P Global noted that U.S. export orders have seen a decline for the twelfth consecutive month.