US MANUFACTURING PMIs
S&P Global: US manufacturing growth expands solidly despite renewed fall in employment and waning optimism
The headline seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index™ (PMI®) registered 53.9 in June, down from 55.1 in May. The latest reading marked the eleventh consecutive month above the crucial 50.0 threshold and signaled a solid improvement in operating conditions.
The PMI was supported by further marked and above trend gains in both output and new orders. That said, growth moderated slightly across both variables, with new orders rising at the softest pace since March. According to panel members, new product launches and pre-orders placed in anticipation of further price rises supported demand.
Where firms reported higher sales, the data pointed to a continued reliance on the domestic market, as new export orders faltered again. Exports declined for the twelfth consecutive month, albeit modestly overall. Tariffs reportedly remained the main factor behind the fall in foreign sales, while some companies also noted subdued international demand, in part linked to the war in the Middle East.
Despite sustained demand growth, US manufacturers refrained from additional hiring in the latest survey period. In fact, employment fell for the second time in three months and at the steepest rate since May 2020. Lower headcounts, combined with rising order inflows, placed further strain on capacity, as backlogs of work rose modestly and at a faster pace than in May.
Inventories of finished goods increased only fractionally in June. Survey evidence suggested that firms, where possible, used existing stocks to complete orders, limiting the extent of replenishment.
US goods producers recorded another marked deterioration in vendor performance during June, with reports of shipping delays and port congestion disrupting supply chains. In response, companies sought to protect input availability by building stocks of purchases, which rose at the strongest rate since May 2025. Purchasing activity also increased at an accelerated pace, with growth the strongest in over four years.
Tariffs and higher raw material prices remained key drivers of input cost inflation in June. The latest data signaled another historically elevated rise in costs, though the rate eased from May’s recent peak. Selling prices were also raised solidly, but factory gate inflation followed the trend in cost burdens and softened to a three-month low.
Finally, firms remained positive about output prospects for the coming year at the end of the second quarter, but the overall degree of optimism fell to an eight-month low. Positive sentiment was linked to hopes that easing inflationary pressures and geopolitical tensions would help stimulate sales and production. However, concerns over the health of the domestic economy continued to weigh on confidence.
ISM:
The Manufacturing PMI® registered 53.3 percent in June, 0.7 percentage point lower than in May. The overall economy continued in expansion for the 20th month in a row. (A Manufacturing PMI® above 47.5 percent, over a
period of time, generally indicates an expansion of the overall economy.)
The New Orders Index expanded for the sixth consecutive month after four straight readings in contraction, registering 56 percent, down 0.8 percentage point compared to May’s figure of 56.8 percent.
The New Export Orders Index returned to contraction territory with a reading of 48.5 percent, 2.1 percentage points lower than the 50.6 percent registered in May.
The Prices Index remained in expansion (or ‘increasing’ territory), registering 73 percent, a 9.1-percentage point decrease from May’s reading of 82.1 percent.
The Employment Index registered 49.7 percent, up 1.1 percentage points from May’s figure of 48.6 percent,” says Spence.
In June, 34 percent of the comments were positive and 66 percent negative, with a 1-to-1.9 ratio of positive to negative sentiment. Among negative comments, the Iran war was mentioned in 31 percent and tariffs in 17 percent; 50 percent of the panelists mentioned pricing volatility as an issue for their companies.
- “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.” [Computer & Electronic Products]
- “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. 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]
- Retailers Rush In Holiday Imports Early to Avoid Looming Costs New tariffs and fuel surcharges spark competition for space on containerships
Ocean shipping rates are surging as U.S. retailers rush in clothes, electronics and holiday items to get ahead of rising costs caused by tariffs and the Iran war.
The average cost to ship a 40-foot container from China to the U.S. West Coast hit $5,933 on Friday, a threefold increase from the end of February and the highest rate since September 2024, according to transportation intelligence company Xeneta. Peter Sand, Xeneta’s chief analyst, said rates could rise by another 30% before they peak.
Logistics industry specialists say importers are bringing forward orders for the busy end-of-year shopping seasons, including Halloween and Christmas, to avoid new tariffs taking effect at the end of July. Some companies have also been scrambling to beat a new round of bunker fuel surcharges that ocean carriers are expected to implement in the coming weeks to account for rising oil prices resulting from the war. (…)
Importers say competition for space on ships is fierce. “We’ve had more delays getting container space in the last three weeks than we’ve had in a long time,” said Bronwen Sainsbury, president of Stack Resources, a Seattle-based wholesaler of home decor. (…)
Freight specialists say some importers are rushing in goods now to take advantage of a brief lowering of tariffs after the Supreme Court struck down most of the levies in February. The administration introduced lower, temporary tariffs in recent months, and is expected to institute higher tariffs, using a different legal mechanism, at the end of July. (…)
(last data point is April)
(…) There were some signs that the upturn had passed its peak. Growth of both output and new orders eased, employment decreased and business optimism fell for the first time in three months. Incoming new business rose for the sixth month in a row, but at the slowest pace since March, with a contraction in international trade volumes acting as a drag on overall intakes of new work.
Some firms noted that the recent boost from clients strategic stockpiling (to guard against supply disruptions) had started to wane. (…)
CONSUMER WATCH
US Car Payments Hit a Record $777 a Month as Down Payments Drop
The automotive affordability crisis is deepening as average monthly car payments reached a record $777 in the second quarter, with nearly a quarter of US car buyers taking out loans of seven years or more.
The average amount financed on a new car also reached an all-time high of $44,156 in the period, according to data released Wednesday by automotive shopping site Edmunds.com. At the same time, stretched buyers have less money to put down on a new car, as the average down payment fell 10% from a year ago to $5,815, Edmunds said.
It’s the latest sign that there’s no letup in accelerating automotive inflation as the average price of a new car in America has stubbornly remained around $50,000. To afford what was once luxury prices, more than a fifth of new car buyers signed up for monthly car payments of $1,000 or more in the second quarter, according to Edmunds. And that’s led many to owe more on their car than it’s worth and others to default on their loans. (…)
“When you see loan terms extending to record lengths, down payments shrinking and monthly payments hitting all-time highs, you’re looking at a clear recipe for long-term financial strain.” (…)
“Car shoppers are caught in a dangerous practice of focusing heavily on their monthly payment while ignoring the potential long-term damage to their wallets,” said Ivan Drury, Edmunds’ director of insights. A seven-year loan at the current 7% interest rate means “you’re signing up to hand over nearly $10,000 on average in interest alone.”
Warsh Says Inflation Outlook Has Improved but Won’t Say if Fed Should Hike Rates
Federal Reserve Chairman Kevin Warsh declined to say Wednesday whether the central bank needed to consider a rate increase later this month but said his first weeks in the job have seen risks of higher inflation recede. That was evidence, he said, that markets have already grasped his hard line on prices.
“Expectations of future inflation [over the last four weeks] have come down. Inflation risks have come down,” Warsh said at a conference in Portugal alongside foreign counterparts. Anyone expecting the Fed would tolerate inflation running above its 2% goal “would be disappointed,” he added. (…)
Warsh brushed aside complaints Wednesday that investors need a clearer sense of how the Fed would adjust as the outlook changes. He pointed to falling interest-rate volatility, lower Treasury yields and expectations that inflation would decline over the coming year or two as early evidence his strategy is succeeding.
“I hear this as if people don’t understand,” he said. “I think they actually understand quite well.”
The outlook for inflation has improved in recent weeks in part because a deal meant to end the war in Iran has pushed energy prices down. (…)
Earlier Wednesday, Kevin Hassett, a senior White House economic adviser, said in an interview on Fox Business that it would be “a macroeconomic mistake” for the Fed to raise rates. Hassett said he believed Warsh shared his view that AI-fueled economic growth wouldn’t be inflationary and wouldn’t require higher interest rates.
Warsh wasn’t asked about Hassett’s remarks. But pressed on whether the AI boom was stoking inflation, he offered an answer that pointed the same direction. Warsh emphasized the longer horizon, when AI could expand the economy’s capacity to produce goods and services and ease price pressures. “That has huge implications” for the Fed if businesses expand that capacity, he said. (…)
In the Fox Business interview, Hassett delivered an implicit warning about the coming decision. Pointing to Jerome Powell, who stayed on as a Fed governor after his term as chair ended in May, Hassett said he was concerned that “a majority of people over at the Fed” might vote for higher rates “not necessarily…because they’re patriotic, but rather because they want to get Trump.”
Hassett exempted Warsh from that critique, portraying him as saddled with an unruly committee. “It’s not going to be Kevin Warsh’s fault, but he’s got to herd some cats over there, and it’s a really difficult job,” Hassett said.
The [9 on 18] officials who have argued for higher rates have framed their case in economic terms—that a resilient economy and sticky inflation, not hostility to the president, warrant tighter policy.
Some see an economy at risk of overheating, with demand outrunning what the Fed’s current rate setting can restrain. Others think policy was never as restrictive as assumed and that, by standing still as inflation has risen this year, the Fed has effectively been easing.
(…) But while he’s right that the bond market is taking him seriously and dialing down inflation expectations, that’s not necessarily great news. The yield curve — the amount by which yields on longer-dated Treasuries exceed shorter-dated bonds — is reducing, in what is known on markets as a “bear flattening.”
To explain this, Mike Howell of Global Liquidity Indexes in London argues as follows:
The US yield curve is flattening, but not in a benign way. In liquidity terms, a flatter curve is consistent with tighter conditions. Less liquidity raises systemic risks and so increases the demand for longer-dated ‘safe’ government debt. The problem is that this implies a bearish flattening… It points to a market increasingly focused on ‘higher-for-longer’ policy risk rather than on a straightforward growth and inflation slowdown.
The rise in two-year yields since inflation fears were revived by the Iran war has been much sharper than in 10-year yields: (…)
Labor Market Tightness Index
The NY Fed’s HPW index is consistent with a pace of ECI annual wage growth of 2.96 percent.
When PCE inflation is 4.1%…
About AI vs labor:
Layoffs are falling. But where companies are cutting, AI is driving a greater share of the downsizing, Axios’ Ben Berkowitz and Avery Lotz write from a Challenger, Gray & Christmas report out today.
Just this year, AI has been blamed for nearly 102,000 job cuts.
- Since 2023, when AI was first tracked as a distinct reason, it’s been cited in more than 173,000 job cut announcements, per the report.
“AI is the dominant force as companies are restructuring around it, automating roles, and reallocating budgets toward new capabilities,” the firm’s Andy Challenger wrote.
Data: Challenger, Gray & Christmas. Chart: Ben Berkowitz/Axios
U.S. Plunges Trade Pact With Canada and Mexico Into Doubt Washington declines to renew deal by Wednesday deadline, setting it up for annual reviews
The U.S. declined to extend its signature trade pact with Mexico and Canada on Wednesday, setting up a decadelong review process that casts uncertainty over businesses that move goods across the world’s busiest export borders.
The U.S. decision came as no surprise. President Trump has effectively ripped up parts of the U.S.-Mexico-Canada trade agreement that he signed in his first administration, imposing tariffs on a range of goods. He has mused about terminating the agreement altogether. (…)
The pact remains in effect, but now the U.S. refusal to renew means American trade representatives will have to meet every year for a decade with Mexican and Canadian officials to continually review the deal. Negotiations can continue in the meantime. (…)
The pact underpins nearly $2 trillion in annual trade. Last year, combined U.S. exports to Mexico and Canada surpassed $670 billion, according to U.S. statistics. In comparison, U.S. exports to China last year amounted to about $106 billion. (…)
Trump Made $1 Billion on Crypto Deals While His Fans Lost a Fortune Roughly two-thirds of investors in the president’s memecoin are currently in the red
(…) Roughly two-thirds of investors in Trump’s memecoin are currently in the red, according to crypto data provider Nansen, which tracks 1.48 million crypto wallets that bought the token since its January 2025 launch. Many fans spent a few thousand on Trump coins while the biggest spenders shelled out millions for the token. Nansen’s analysis of 26,663 wallets shows that 85% of World Liberty’s $WLFI token buyers in the secondary market are underwater.
Trump, who in 2021 described bitcoin as a “scam” threatening the U.S. dollar, now leads a White House that has pledged to make America the “crypto capital of the world.” As his administration lightened regulation of the notoriously boom-and-bust sector, the Trump family’s sprawling crypto business reached into nearly every corner of the industry, drawing conflict-of-interest concerns from ethics watchdogs. Bitcoin prices also plunged. (…)
Days before his inauguration, Trump launched his memecoin, $TRUMP, which surged to a peak market capitalization of nearly $15 billion before plunging 97% to about $400 million today. In September 2024, Trump and his sons helped launch World Liberty Financial, the family’s flagship crypto venture.
That project subsequently released a dollar-pegged stablecoin shortly before Trump signed the Genius Act into law, establishing a regulatory framework for such dollar-pegged tokens.
White House officials say those actions don’t constitute conflicts of interest. “Neither the President nor his family has ever engaged—or will ever engage—in conflicts of interest,” White House spokeswoman Anna Kelly said. “All actions by President Trump and his administration are taken in the best interest of the American people.” [This is a recording] (…)
The WSJ Editorial Board:
- The Trump Family and ‘Honest Graft’ They are profiting off the Presidency in ways that demean the office.
(…) The Trump clan is cashing in on the Presidency in big and sketchy ways. (…)
We have detailed some of World Liberty’s dubious deals with foreign actors that may have been trying to buy influence with the Administration. This includes DWF Labs, a crypto firm based in the United Arab Emirates, and the Pakistan government. Abu Dhabi used World Liberty’s stablecoin to invest in the Binance crypto platform.
Binance pleaded guilty in 2023 to violating U.S. anti-money laundering laws and Iran sanctions. Its co-founder Changpeng Zhao, who pleaded guilty to violating the Bank Secrecy Act, was pardoned by Mr. Trump in October. The Journal reported in May that since the plea deals billions of dollars were routed through Binance and financed Iran’s regime.
Then there’s the Trump family’s financial alchemy involving government support for critical minerals. The Administration has provided billions of dollars in financing to an array of critical mineral developers to shore up U.S. supply chains so China can’t weaponize its dominance. The government investment has caused an industry gold rush.
The Trumps are seeing their opportunities and taking them, in the tradition of what Tammany Hall’s George Washington Plunkitt called “honest graft.” (For Princeton history majors, Tammany Hall was a 19th century Democratic political machine.) The President’s disclosure report shows capital gains in the range of $100,000 to $1 million from critical mineral developer MP Materials, whose share price surged last summer after the company announced the Pentagon was taking a 15% stake.
Donald Trump Jr.’s venture capital firm, 1789 Capital, invested in Vulcan Elements three months before the company received a $620 million government loan. Investment bank Cantor Fitzgerald, which is headed by Commerce Secretary Howard Lutnick’s sons, has been a financial adviser or underwriter for many startups that have received government support.
The Trump Administration has also offered up to $1.6 billion in financing for a project to develop a tungsten mine in Kazakhstan. There’s no question the U.S. needs to diversify its tungsten supply, which is critical to weapons systems. But a firm partly owned by Mr. Trump’s sons Eric and Donald Jr. invested in a company backing the project shortly before the Administration announced a minerals deal with Kazakhstan last November that paved the way for the project. Kazakhstan President Kassym-Jomart Tokayev posted a photo of himself at a White House deal-signing ceremony.
The Administration has proposed establishing price floors for critical minerals to ensure China can’t flood the market and financially undercut alternative suppliers, as it has in the past. This might make sense, but a government guaranteed price paired with financial support make these projects potentially very lucrative for investors like the Trump family.
***
Assuming all of this is legal, it’s still an unseemly display of using the Presidency for family profit. It’s hard to believe the Trump boys would be able to do the same deals if Dad wasn’t in the Oval Office. The main difference between Hunter Biden’s foreign dealings and the Trump projects is that the Trumps are brazenly open about theirs.
But there will be political costs—for Republicans. If Democrats take back the House or Senate this November, they will have a field day probing the Trump family deals. Charges of GOP corruption will resound through 2028. This will feed the left’s class warfare and facile narrative that billionaire “oligarchs” are getting rich off government.
Foreigners may come to think they can buy American goodwill or favors if they cut the Trumps in on the action. Americans, and especially his supporters, deserve better from this or any President.
“Foreigners may come to think”? Many foreigners are smarter than the WSJ EB and figured that out a while ago.
The mandatory recording again: “All actions by President Trump and his administration are taken in the best interest of the American people.”
Yesterday in the WSJ, Barton Swain, author of the “Unruly Republic” column, wrote
What the Founders Didn’t Trust Madison, Hamilton, et al. would wonder at our credulous view of human nature.
(…) The doctrine of original sin—and its implication that humans tend toward rank self-interest and degeneracy—animated every part of the constitutional structure the Founders erected. (…)
Spend the rest of this semiquincentennial year reading the Federalist Papers and mark how often the authors—Alexander Hamilton, John Jay and James Madison—base their contentions on the reality that fallen man can be counted on to conflate his own narrow interests with justice and the common good.
The essays refer often to man’s ingenuity and capacity for innovation and commerce—they didn’t think him so stupid as to require coercion. But Hamilton, Jay and Madison aimed chiefly to convince the public that the proposed Constitution, by balancing powers against each other, mitigated man’s propensity for mischief, violence and corruption.
Madison famously observes in No. 51 that government’s existence itself testifies to the morally defective state of its subjects. “If men were angels, no government would be necessary,” he writes. “If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.”
Or Hamilton, in No. 15: “Why has government been instituted at all? Because the passions of men will not conform to the dictates of reason and justice without constraint.” (…)
The FT’s Editorial Board:
Supreme Court checks Trump, but empowers the presidency Despite losses on tariffs and birthright citizenship, the executive has emerged stronger
(…) The six Republican appointees continue to push the US right’s decades-long project to reshape the government by hobbling the administrative state and concentrating power in the executive. (…)
Although the court protected Cook, it allowed Trump to fire Federal Trade Commission Rebecca Slaughter without cause. That landmark decision overturns a 90-year-old precedent and kneecaps Congressional laws protecting the independence of federal watchdogs. The result will be more politicised and less predictable regulation, creating uncertainty for everyone from banks and dealmakers to pharmaceutical companies. (…)
The majority took another giant whack out of the seminal 1965 Voting Rights Act with a ruling that makes it much harder for minority voters to challenge legislative maps. Combined with earlier rulings that greenlight political gerrymandering, these rulings open the door to all manner of monkeying with the American electoral process.
Global experience with would-be autocratic leaders shows that free and fair elections and courts willing to check presidential power are critical to protecting a democratic future. (…)
The 2024 decision that granted Trump immunity from prosecution for official acts in his first term has empowered the president to take even more extreme positions now that he is back in office. T
his term’s decisions suggest that constitutional guardrails continue to hedge Trump in. But they are fragile and being undermined by the rightwing campaign to shift power to the presidency at the expense of Congress and independent regulators.
Justice Sonia Sotomayor’s dissent in the Slaughter case is chilling. Observing that the independent agency structure has been accepted since the early 1930s, she writes “the Court discards that democratic regime in favour of one that distorts the structure of Government to fit the majority’s theory of unitary, total executive control. The result is a President who emerges with far greater power than ever before.”
As the nation prepares to celebrate the 250th anniversary of throwing off the yoke of monarchy, it is a shame that the Supreme Court majority seems bent on recreating one.
FYI:
The Financial Times now reaches a global audience of roughly 20 million readers a month. Its readership is heavily international, affluent, and skewed toward senior business decision‑makers, with a notable C‑suite and finance professional concentration.
The FT emphasizes that roughly 70% of its readers are outside the UK, characterizing it as a “truly global” publication.
The FT’s opinion pages have outsized influence because they reach a concentrated global audience of policymakers, corporate leaders, and investors, and are widely perceived as authoritative, economically literate, and relatively centrist on business issues.