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Manufacturing activity expands at strongest pace since 2022
Sector benefits from resilient consumer demand, solid business investment and government outlays on defense
A worker uses a brushing machine to refinish reclaimed wooden siding at The Hudson Co. sawmill in Pine Plains, N.Y. (Angus Mordant/Bloomberg)
Key Takeaways:
- U.S. manufacturing expanded in July as ISM’s manufacturing index rose to 55.6, its highest level since May 2022 and seventh straight month of growth.
- Strong demand, surging production and the first manufacturing employment growth since September 2023 helped drive momentum despite higher raw-material costs and supply delays.
- Export and import gauges reached multiyear highs, while manufacturers continue monitoring oil-price volatility and Middle East tensions affecting supply chains.
U.S. manufacturing activity expanded in July at the fastest pace in more than four years as demand remained strong, production surged and firms added workers.
The Institute for Supply Management's July manufacturing gauge rose to 55.6, the highest since May 2022.
Readings above 50 indicate growth, and the sector has now been above that mark for seven consecutive months.
The gauge for production rose to 58.5, its highest level since late 2021, while the employment measure indicated manufacturers increased head count for the first time since September 2023.
New orders growth — a sign of demand — also picked up.
The manufacturing sector has gained momentum this year, with factories benefiting from resilient consumer demand, solid business investment and government outlays on defense.
.@ISM® Manufacturing PMI®: What would you call the highest #ISMPMI (55.6%) reading in over four years, five key subindexes in expansion and increasing by a combined 11.4 points, and employment growth for the first time in 33 months? A July on 🔥. https://t.co/U2u95y32CH #economy — Institute for Supply Management (@ism) August 3, 2026
The report reflects a volatile month in the Middle East. The interim peace deal between the U.S. and Iran effectively collapsed, driving up oil prices. After a brief respite in hostilities, fighting in the five-month war flared again toward the end of the month as attacks spread throughout the region.
Factories continued to face longer lead times on supplier deliveries and rising prices for raw materials. ISM's prices index fell to 71.1 in July, the lowest in five months but still significantly higher than at the beginning of the year.
ISM's gauge of exports for July was the highest since March 2022 and a measure of imports climbed to its best mark since June 2021.
