US manufacturing activity contracted for the fifth straight month in July, with factory employment hitting its lowest level in over five years, according to new data from the Institute for Supply Management (ISM). The ISM’s Manufacturing Purchasing Managers' Index (PMI) fell to 48.0 in July from 49.0 in June, signalling continued contraction in the sector. A PMI reading below 50 indicates that manufacturing activity is shrinking, which is a critical signal for the economy since manufacturing makes up about 10 per cent of US GDP.The sharp decline in factory employment was a major contributor to the weak PMI reading. The ISM’s manufacturing employment index dropped to 43.4, its lowest level since July 2020. This marks a significant slowdown in hiring as companies face rising raw material costs, partly driven by tariffs imposed earlier in the year. The survey highlighted an “acceleration of headcount reductions due to uncertain near- to mid-term demand,” suggesting that manufacturers are focusing more on cost control rather than expansion.<h2>Weak demand and persistent tariff challenges</h2>The contraction in manufacturing was exacerbated by declining demand for factory goods, which has contributed to six consecutive months of reduced new orders. The new orders sub-index rose slightly to 47.1 from 46.4, but it remained in contraction territory. The overall outlook for the sector remains bleak, with the ISM pointing to an ongoing slowdown in production. While the production index rose to 51.4 from 50.3, indicating a slight improvement in output, many industries continued to report lower demand, leading to staff reductions.In addition to the ongoing demand challenges, rising tariffs on imported raw materials have increased the cost pressures on manufacturers. Prices for factory inputs remained high in July, though the pace of increase slowed. The ISM’s supplier deliveries index fell to 49.3 from 54.2, the first time since November 2022 that it dropped below 50, indicating improvements in delivery times. Despite the easing in delivery delays, the price gauge for input costs remained elevated at 64.8, down from 69.7 in June.<h2>Uncertainty ahead as tariffs impact inflation</h2>The ongoing tariff-driven inflation continues to be a major concern for manufacturers. Government data released earlier this week showed that goods prices in June rose at their fastest rate in five months, with economists predicting that the rise in goods inflation would persist through the second half of 2025. While the tariffs imposed by US President Donald Trump have not increased in intensity, producers remain anxious about potential new duties on crucial imports such as pharmaceuticals, semiconductors, and critical minerals, which could further disrupt supply chains.The manufacturing slump, marked by falling employment and production slowdowns, signals a tough road ahead for the US economy, with uncertain demand and rising input costs making it increasingly difficult for companies to navigate the challenges of a volatile global trade environment.&nbsp;(With inputs from agencies)

The contraction in manufacturing was exacerbated by declining demand for factory goods, which has contributed to six consecutive months of reduced new orders. The new orders sub-index rose slightly to 47.1 from 46.4, but it remained in contraction territory.

US manufacturing activity contracted for the fifth straight month in July, with factory employment hitting its lowest level in over five years, according to new data from the Institute for Supply Management (ISM). The ISM’s Manufacturing Purchasing Managers' Index (PMI) fell to 48.0 in July from 49.0 in June, signalling continued contraction in the sector. A PMI reading below 50 indicates that manufacturing activity is shrinking, which is a critical signal for the economy since manufacturing makes up about 10 per cent of US GDP. The sharp decline in factory employment was a major contributor to the weak PMI reading. The ISM’s manufacturing employment index dropped to 43.4, its lowest level since July 2020. This marks a significant slowdown in hiring as companies face rising raw material costs, partly driven by tariffs imposed earlier in the year. The survey highlighted an “acceleration of headcount reductions due to uncertain near- to mid-term demand,” suggesting that manufacturers are focusing more on cost control rather than expansion. Weak demand and persistent tariff challenges The contraction in manufacturing was exacerbated by declining demand for factory goods, which has contributed to six consecutive months of reduced new orders. The new orders sub-index rose slightly to 47.1 from 46.4, but it remained in contraction territory. The overall outlook for the sector remains bleak, with the ISM pointing to an ongoing slowdown in production. While the production index rose to 51.4 from 50.3, indicating a slight improvement in output, many industries continued to report lower demand, leading to staff reductions. In addition to the ongoing demand challenges, rising tariffs on imported raw materials have increased the cost pressures on manufacturers. Prices for factory inputs remained high in July, though the pace of increase slowed. The ISM’s supplier deliveries index fell to 49.3 from 54.2, the first time since November 2022 that it dropped below 50, indicating improvements in delivery times. Despite the easing in delivery delays, the price gauge for input costs remained elevated at 64.8, down from 69.7 in June. Uncertainty ahead as tariffs impact inflation The ongoing tariff-driven inflation continues to be a major concern for manufacturers. Government data released earlier this week showed that goods prices in June rose at their fastest rate in five months, with economists predicting that the rise in goods inflation would persist through the second half of 2025. While the tariffs imposed by US President Donald Trump have not increased in intensity, producers remain anxious about potential new duties on crucial imports such as pharmaceuticals, semiconductors, and critical minerals, which could further disrupt supply chains. The manufacturing slump, marked by falling employment and production slowdowns, signals a tough road ahead for the US economy, with uncertain demand and rising input costs making it increasingly difficult for companies to navigate the challenges of a volatile global trade environment. (With inputs from agencies)

The contraction in manufacturing was exacerbated by declining demand for factory goods, which has contributed to six consecutive months of reduced new orders. The new orders sub-index rose slightly to 47.1 from 46.4, but it remained in contraction territory.

US manufacturing continues slump amid tariff impact; factory employment hits 5-year low

US factory activity took a significant hit in March, according to the Institute for Supply Management’s gauge of manufacturing activity.

The reading decreased to 46.3, well below the median estimate of 47.5, the lowest level since May 2020. A reading below 50 indicates contraction, and last month’s reading was the worst since 2009, even if the pandemic is ignored.

The manufacturing sector faces challenges, including rising interest rates, growing recession fears, and tighter lending conditions.

These factors are starting to weigh on business investment and exacerbate the demand challenges the sector already faces as households continue to shift more of their discretionary spending toward services.

The new orders index deteriorated in March to 44.3, and the production gauge, while improving from a month earlier, remained in contraction territory.

Timothy Fiore, the ISM’s Manufacturing Business Survey Committee chair, believes that new orders have remained sluggish as manufacturing continues.

However, given the pretext of price volatility, future demand remains uncertainThe employment measure fell for a third month to 46.9, indicating headcount declined in the month, with factories implementing hiring freezes and laying off workers.

The government’s employment report will be released on Friday and will provide a more comprehensive picture of the job market in the month.

Twelve industries reported contraction in March, led by furniture, nonmetallic mineral products, and textiles, while six sectors expanded.

Supplier deliveries quickened, and the gauge fell to a 14-year low on the back of subdued demand, helping to alleviate any lingering strains in supply chains.

According to statistics released last week, a key inflation indicator frequently watched by Federal Reserve officials increased at a slower rate in February.

The measure of prices paid for materials also showed dropping costs. The service sector of the economy has experienced particularly obstinate price pressure.

Overall, the data indicates the manufacturing industry is grappling with serious issues.

With recession fears on board and stricter lending standards, concerns remain largely staggering. Even while some industries are growing, the overall image is one of contraction and uncertainty, and many businesses are still attempting to catch up on backlogs and past-due deliveries.

You can now write for wionews.com and be a part of the community. Share your stories and opinions with us <a href="https://www.wionews.com/content-contribution-registration-form">here</a>.

WATCH WION LIVE HERE

<div class="ui-state-default" contenteditable="false">
<div class="twitter-block" draggable="false"><iframe allow="accelerometer; autoplay; encrypted-media; gyroscope; picture-in-picture" allowfullscreen="" frameborder="0" height="350" loading="”lazy”" src="https://www.wionews.com/live-tv/embed?autoplay=1&amp;mute=1" width="100%"></iframe></div>
<a class="close-mark close-div" href="#" id="jqclosemark">×</a></div>

&nbsp;

US factory activity took a significant hit in March, according to the Institute for Supply Management’s gauge of manufacturing activity. The reading decreased to 46.

US factory activity took a significant hit in March, according to the Institute for Supply Management’s gauge of manufacturing activity. The reading decreased to 46.3, well below the median estimate of 47.5, the lowest level since May 2020. A reading below 50 indicates contraction, and last month’s reading was the worst since 2009, even if the pandemic is ignored. The manufacturing sector faces challenges, including rising interest rates, growing recession fears, and tighter lending conditions. These factors are starting to weigh on business investment and exacerbate the demand challenges the sector already faces as households continue to shift more of their discretionary spending toward services. The new orders index deteriorated in March to 44.3, and the production gauge, while improving from a month earlier, remained in contraction territory. Timothy Fiore, the ISM’s Manufacturing Business Survey Committee chair, believes that new orders have remained sluggish as manufacturing continues. However, given the pretext of price volatility, future demand remains uncertainThe employment measure fell for a third month to 46.9, indicating headcount declined in the month, with factories implementing hiring freezes and laying off workers. The government’s employment report will be released on Friday and will provide a more comprehensive picture of the job market in the month. Twelve industries reported contraction in March, led by furniture, nonmetallic mineral products, and textiles, while six sectors expanded. Supplier deliveries quickened, and the gauge fell to a 14-year low on the back of subdued demand, helping to alleviate any lingering strains in supply chains. According to statistics released last week, a key inflation indicator frequently watched by Federal Reserve officials increased at a slower rate in February. The measure of prices paid for materials also showed dropping costs. The service sector of the economy has experienced particularly obstinate price pressure. Overall, the data indicates the manufacturing industry is grappling with serious issues. With recession fears on board and stricter lending standards, concerns remain largely staggering. Even while some industries are growing, the overall image is one of contraction and uncertainty, and many businesses are still attempting to catch up on backlogs and past-due deliveries. You can now write for wionews.com and be a part of the community. Share your stories and opinions with us here. WATCH WION LIVE HERE ×

US factory gauge falls to lowest since 2020, indicates imminent recession

us-factory

Us Factory, News on Us Factory, stories on Us Factory, articles on Us Factory, Us Factory stories at Wion, Us Factory news, Us Factory latest news

us factory

US manufacturing continues slump amid tariff impact; factory employment hits 5-year low

US factory gauge falls to lowest since 2020, indicates imminent recession