- KPI – July 2026: The Brief
- KPI – July 2026: State of Business – Automotive Industry
- KPI – July 2026: State of the Economy
- KPI – July 2026: Consumer Trends
- KPI – July 2026: Recent Vehicle Recalls
In June, economic activity in the manufacturing sector expanded for the sixth consecutive month, according to the nation’s supply executives in the latest ISM Manufacturing PMI Report. The Manufacturing PMI registered 53.3%—0.7 percentage point lower than a month ago. The overall economy continued to expand for the 20th month in a row.
“In June, U.S. manufacturing activity remained in expansion territory, growing at a slightly slower pace compared to the month before. Of the five subindexes that make up the PMI, the New Orders and Production indexes grew slower as compared to the previous month, the Supplier Deliveries Index slowed at a slower rate, and the Employment and Inventories indexes improved, with the latter entering expansion territory,” says Susan Spence, MBA, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.
Data shows 5% of the sector’s gross domestic product (GDP) contracted in June, compared to 2% in May, while the percentage of manufacturing GDP in strong contraction (defined as a composite PMI of 45% or lower) was 3% compared to 2% a month ago.
“The share of sector GDP with a PMI at or below 45% is a good metric to gauge overall manufacturing weakness. All but one (Petroleum & Coal Products) of the six largest manufacturing industries expanded in June, in the following order: Computer & Electronic Products, Machinery, Transportation Equipment, Chemical Products, and Food, Beverage & Tobacco Products,” Spence says.
| Index | Series Index Jun | Series Index May | Percentage Point Change | Direction | Rate of Change | Trend* (Months) |
|---|---|---|---|---|---|---|
| Manufacturing PMI | 53.3 | 54.0 | -0.7 | Growing | Slower | 6 |
| New Orders | 56.0 | 56.8 | -0.8 | Growing | Slower | 6 |
| Production | 52.2 | 54.3 | -2.1 | Growing | Slower | 8 |
| Employment | 49.7 | 48.6 | +1.1 | Contracting | Slower | 33 |
| Supplier Deliveries | 57.4 | 60.6 | -3.2 | Slowing | Slower | 7 |
| Inventories | 51.4 | 49.9 | +1.5 | Growing | From Contracting | 1 |
| Customers’ Inventories | 42.3 | 42.7 | -0.4 | Too Low | Faster | 21 |
| Prices | 73.0 | 82.1 | -9.1 | Increasing | Slower | 21 |
| Backlog of Orders | 50.5 | 52.2 | -1.7 | Growing | Slower | 6 |
| New Export Orders | 48.5 | 50.6 | -2.1 | Contracting | From Growing | 1 |
| Imports | 52.9 | 53.0 | -0.1 | Growing | Slower | 5 |
| OVERALL ECONOMY | Growing | Slower | 20 | |||
| Manufacturing Sector | Growing | Slower | 6 | |||
Important Takeaways, Courtesy of the Manufacturing ISM Report On Business:
- Two of four demand indicators (New Orders and Backlog of Orders) were in expansion, while the Customers’ Inventories Index remained in “too low” territory, contracting at a faster rate. A “too low” status for the Customers’ Inventories Index is usually considered positive for future production. New Export Orders returned to contraction, losing 2.1 percentage points since May.
- Regarding output, the Production Index is in expansion for the eighth month in a row. The Employment Index increased by 1.1 percentage points but remained in contraction. Among panelists, 36% indicated that managing headcounts remains the norm at their companies, while 64% are hiring—a near reversal of those numbers from the start of the year.
- Inputs—defined as supplier deliveries, inventories, prices and imports—were mixed, with the Supplier Deliveries Index decreasing 3.2 percentage points; the Inventories Index entering into expansion; the Imports Index losing 0.1 percentage point but staying in expansion; and Prices Index relief coming with a 9.1-percentage point drop, a reading of 73% versus 82.1% in May.
What Respondents Are Saying:
- “The conflict in Iran has impacted pricing in every category of raw materials. Especially items that have a heavy concentration of oil in the components like our adhesives.” [Chemical Products]
- “Continued pressure from conflict in Middle East is resulting in a more conservative approach to capital expenditures. We are seeing an increase in consumables and services purchasing from sectors like chemical analysis, per- and polyfluoroalkyl substances (PFAS) and environmental and pharmaceutical testing.” [Computer & Electronic Products]
- “General purchasing operations are being shaped by (1) moderating but still elevated inflation, (2) higher interest rates and (3) continued policy uncertainty, particularly around tariffs and global trade. While overall economic growth remains resilient, it is slowing as consumer spending weakens under pressure from higher costs for energy and essential goods, reducing demand visibility and increasing cost sensitivity for buyers. Meanwhile, supply chains have stabilized compared to prior years but remain structurally complex, with trade policy volatility, geopolitical tensions and regulatory changes now ongoing cost drivers rather than temporary disruptions. Our organization continues balancing cost control with resilience, shifting sourcing strategies, tightening inventories and prioritizing supplier diversification and risk management.” [Computer & Electronic Products]
- “Retail electronics sales seem to have stabilized to some extent. The pause in tariff changes has been welcomed the last two months, but it’s only a matter of time before more confusion is introduced.” [Electrical Equipment, Appliances & Components]
- “Input costs remain elevated across key categories, driven largely by Middle East conflict impacts and ongoing tariff uncertainty. Supplier lead times have stretched, which is influencing our inventory strategy and sourcing decisions. We are managing exposure through diversified supplier bases and contract structures that balance cost certainty with operational flexibility.” [Food, Beverage & Tobacco Products]
- “Conditions are optimistic but not yet booming for our company, even though many others, it seems, are experiencing growth. Machinery in support of defense and semiconductor manufacturing is very strong, a bright spot for our team. Industrial and medical clients are slow to purchase, focusing more on refurbished and upgraded units versus new ones.” [Machinery]
- “Core business remains solid in the face of ongoing geopolitical uncertainty. Cautiously optimistic that a deal will be reached to reopen the Strait of Hormuz. Concerned about ongoing ripple effects even when the strait reopens, but the situation is highly concerning if the strait remains closed. AI industry continues to have huge capacity consumption for critical electronics. Monitoring impact of U.S. defense industry needs on supplier capacity.” [Miscellaneous Manufacturing]
- “No major changes from last month. With the potential ending of the Iran war, management is expecting us to go back to February pricing structures and plans since the increase in oil prices was driven by the war and not regular market influences.” [Petroleum & Coal Products]
- “Requests from suppliers in Europe and India for ‘energy surcharges’ have stopped this past month. We’re seeing continued capacity growth in the Asia-Pacific region (excluding China), including Vietnam, Thailand and South Korea. Most suppliers are building for the longer term as geopolitical protection from all sides.” [Transportation Equipment]
- “The new Section 232 tariffs continue to destroy our profitability and demand as we have to raise prices to deal with this gigantic tax. Add the ‘incentives’ for our company to pivot to purchasing non-U.S. sourced material, and one realizes the total ineptitude of this tariff policy.” [Transportation Equipment]
