U.S. Manufacturing Grows Amid Strong Demand, Declining Inflationary Pressures

01 Jul 2026, 17:41 by John Carney · Breitbart

The U.S. manufacturing sector continued to expand in June, and the price increases that have squeezed manufacturers for much of the past two years began to ease significantly, according to a pair of surveys released Wednesday.

The Institute for Supply Management’s manufacturing index registered 53.3 in June, down from 54.0 in May but marking a sixth consecutive month of expansion. A separate gauge from S&P Global came in with a reading of 53.9, extending an 11-month run of expansion.

Readings above 50 in both surveys indicate expansion. Economists watch the indexes for early signs of turns in the economy because they are based on real-time responses from purchasing managers rather than government data that can take weeks or months to compile.

New orders and production remained well above their historical averages in both surveys, even as the pace of growth slowed from May. ISM’s new-orders index came in at 56, and S&P Global’s report described new-order growth as “above trend” despite easing to its softest pace since March.

“U.S. manufacturers reported a further marked improvement in growth of output and order books in June,” said Chris Williamson, chief business economist at S&P Global Market Intelligence, adding that the gains extended a run that began with the outbreak of the war in the Middle East.

Order backlogs continued to build in June, and manufacturers stepped up purchases of raw materials and components at rates not seen in years. S&P Global said stocks of purchases grew at the fastest pace since May 2025, while ISM’s inventories index swung back into expansion.

Inflationary pressures are easing. ISM’s prices index fell 9.1 percentage points to 73 in June, its largest one-month decline since July 2022. S&P Global likewise reported that growth in prices charged by manufacturers slowed to a three-month low, while cost increases, though still elevated, moderated from May’s peak.

Both surveys tied the improvement to the same factor: falling energy prices amid signs of de-escalation in the Middle East conflict. Mr. Williamson said the shift was feeding into expectations for the year ahead, even as some manufacturers grew more cautious about what comes next. Business optimism fell to an eight-month low in the S&P Global survey, which noted that some firms worried an end to war-related inventory stockpiling could weigh on sales once the conflict eases.

The two surveys diverged sharply on employment. S&P Global reported the steepest one-month drop in manufacturing payrolls since May 2020. ISM’s employment index moved the other direction, rising to 49.7 from 48.6 — still showing contraction, but the best reading in months. ISM said the ratio of manufacturers reporting plans to hire, versus those managing down or cutting staff, was 1.8 to 1 in June, nearly a reversal from where sentiment stood at the start of the year.

A global measure of factory activity, compiled by J.P. Morgan and S&P Global, found that the U.S. manufacturing sector’s health ranks sixth among more than 30 countries and regions tracked. The U.S. trailed the Netherlands, Taiwan, Ireland, Japan, and India. China, South Korea, Mexico, and the Eurozone all trailed the U.S. score in S&P Global’s PMIs.

Export orders were the weak spot across the reports. ISM’s new-export-orders index fell back into contraction, at 48.5, while S&P Global reported a 12th consecutive month of declining U.S. export orders.