The S&P Global US Manufacturing PMI final reading for July came in at 53.9, unchanged from June's level of 53.9 and slightly above the preliminary reading of 53.8. As a diffusion index, readings above 50 signal expansion while those below 50 indicate contraction, placing July firmly in growth territory. The figure signals continued expansion in the manufacturing sector, though underlying indicators point to moderating momentum.

Survey Highlights

• The headline PMI held steady at 53.9, indicating ongoing but measured manufacturing expansion.
• Output growth decelerated to its slowest pace since March.
• New orders softened for the third consecutive month.
• Export demand remained subdued, pressured by tariffs and weak global demand.
• Supply chain disruptions intensified, with vendor delays ranking among the worst in four years, attributed to Middle East–related disruptions.
• Input costs and selling prices continued to climb, though inflationary pressures eased modestly.
• Hiring remained muted, while backlogs edged higher due to material shortages.
• Business confidence dropped to its lowest level since October 2025, driven by concerns over inflation, supply constraints, and slowing sales.

The report depicts a manufacturing sector that is still expanding but gradually losing traction. Domestic demand continues to underpin growth, yet persistent supply chain disruptions, elevated costs, weaker export demand, and waning business confidence suggest increasing vulnerability as the sector moves into the second half of the year. The S&P Global PMI is one of two closely watched US manufacturing gauges alongside the Institute for Supply Management's ISM Manufacturing PMI, and together they provide a composite view of factory-sector health that policymakers and businesses track for signals about broader economic momentum.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated:

"Although the headline PMI held steady in July, beneath the survey we see some warning signs about the future growth trajectory. Production rose at a markedly slower rate in July, linked to a third month of weakened growth of new business, in turn reflecting reduced inventory building after the especially strong precautionary stock accumulation reported in the second quarter. Further pressure came from increased supply chain delays, falling exports, and further pushback on high prices from customers. While input cost inflation moderated slightly, inflationary pressures remained elevated thanks principally to the combination of high energy prices and tariffs. In response, producers are either trying to raise selling prices to protect margins or boost productivity, hence July also saw another month of high factory gate price inflation and subdued job gains. In this environment, business optimism about growth prospects slipped to the lowest since last October, underscoring the downside risks to the near-term outlook."

Equity Market Reaction

Despite the cautionary signals regarding future growth, US equity markets traded higher. The Nasdaq rose approximately 1%, the S&P 500 gained 0.82%, and the Dow Jones Industrial Average advanced 1.22%. Leading gainers included:

• Microsoft (MSFT): +5.40%
• Amazon (AMZN): +5.29%
• Salesforce (CRM): +4.90%
• Boeing (BA): +4.11%
• Sherwin-Williams (SHW): +3.58%