US Manufacturing Activity Expands at Fastest Pace Since 2022

The ISM Manufacturing PMI for the US rose to 55.6 in July 2026 from 53.3 in June, beating market expectations of 54.0 and signaling the strongest expansion in factory activity since May 2022. The improvement was driven by a sharp acceleration in output that was the fastest since November 2021 (58.5 vs. 52.2) and solid growth in new orders (56.7 vs. 56.0). Employment also returned to expansion for the first time since January 2025, with the employment index rising to 52.8 from 49.7, its highest level since August 2022. Meanwhile, cost pressures eased, while the Supplier Deliveries Index indicated slowing performance for the eighth month in a row. Manufacturing continued to benefit from businesses front-loading orders to avoid potential supply disruptions and higher costs linked to the US-Israeli conflict with Iran. At the same time, strong AI-related investment helped offset the impact of import tariffs, while low business inventories left room for further expansion.

The ISM Manufacturing PMI for the US fell to 53.3 in June 2026, down from 54.0 in May and below market expectations of 54. The latest reading indicated a slowdown in the manufacturing sector, as both output (52.2 vs. 54.3 in May) and new orders (56.0 vs. 56.8) grew at a slower pace. Employment remained in contraction territory, although the pace of job losses eased, with the employment index rising to 49.7 from 48.6. Meanwhile, the prices index declined sharply to 73.0 from 82.1, indicating some easing in cost pressures, though price growth remained elevated. Survey respondents continued to cite concerns over moderating but still high inflation, driven in part by the conflict in the Middle East. They also pointed to the risk of higher interest rates and ongoing policy uncertainty, particularly surrounding tariffs and global trade, as key headwinds for the manufacturing sector.

The ISM Manufacturing PMI rose to 54 in May 2026 from 52.7 in each of the previous two months and beating forecasts of 53. The reading pointed to the strongest expansion in the factory sector since May 2022, with faster growth seen for new orders (56.8 vs 54.1), production (54.3 vs 53.4) and backlog of orders (52.2 vs 51.4). Also, employment contracted less (48.6 vs 46.4). Price pressures remained elevated but below the levels seen in April (82.1 vs 84.6). The Supplier Deliveries index stayed the same at 60.6. Meanwhile, the Customers’ Inventories Index remains in ‘too low’ territory, contracting at a slower rate. A ‘too low’ status for the Customers’ Inventories Index is usually considered positive for future production. "Among comments, the Iran war was mentioned in 42 percent and tariffs in 18 percent; 57 percent of the panelists mentioned pricing volatility as an issue for their companies", according to Susan Spence, Chair of the ISM Manufacturing Business Survey Committee.