US Manufacturing Hits Four-Year High

US manufacturing expanded at its fastest pace in more than four years in July, signaling continued strength in the industrial sector despite ongoing geopolitical and trade-related challenges. The ISM Manufacturing PMI rose to 55.6, up from 53.3 in June and well above the market forecast of 54.0, marking the strongest reading since May 2022.

Production and Hiring Strengthen

The improvement was driven by a sharp increase in production, with the output index climbing to 58.5, its highest level since November 2021. New orders remained solid at 56.7, indicating that demand continued to support manufacturing activity.

Employment also returned to growth for the first time since January 2025, with the employment index rising to 52.8, its strongest reading in nearly four years. Meanwhile, easing cost pressures provided some relief for manufacturers after months of elevated input prices.

Companies continued to bring forward orders to reduce the risk of supply disruptions and higher costs linked to tensions in the Middle East. At the same time, strong investment in AI infrastructure helped offset some of the pressure from import tariffs.

While low business inventories could support further production growth in the months ahead, weaker supplier performance and ongoing geopolitical uncertainty remain key risks for the manufacturing outlook.

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