The U.S. manufacturing sector experienced its fifth consecutive month of decline in July while factory employment reached its lowest point since 2019 because of trade tensions and increasing import expenses.
The manufacturing PMI from the Institute for Supply Management dropped to 48.0 which indicates a contraction in the sector since the 50 threshold marks expansion. The economic community predicted a slight improvement to 49.5. The current manufacturing sector faces ongoing challenges because forward-looking new orders remain weak.
Manufacturers show an increasing tendency to reduce their workforce despite production levels slightly increasing. The survey’s employment index reached its lowest point since July 2020 at 43.4 because companies reduced their workforce because of uncertain market conditions. The ISM reports that businesses are increasing their layoffs because they remain concerned about future business conditions.
The expenses for imported raw materials continue to stay at elevated levels. The index showed a decrease in input prices during the previous month but maintained a historically high reading of 64.8 which indicates that inflationary pressures continue to persist. The improvement in supplier delivery times indicates both reduced bottlenecks and decreased market demand.
The government statistics indicate rising goods inflation because of the Trump administration’s tariffs implementation. The economic outlook for the second half of 2025 indicates a continued slowdown in U.S. industrial activity.
