US Economy Shifts into Overdrive: Manufacturing and Factory Orders Surge, Services Sector Steadies the Wheel

The latest batch of US economic data released today paints a picture of robust manufacturing momentum, a steady services sector, and a significant rebound in factory orders, underscoring the resilience of the American economy as it enters the second half of 2025.

 

Key Highlights:

 

Manufacturing PMI Hits Three-Year High:

The S&P Global US Manufacturing PMI for June signaled the strongest improvement in operating conditions since early 2022. Output rose for the first time since February, driven by sustained growth in new orders for the sixth consecutive month. Both domestic and international demand contributed to the uptick. However, manufacturers faced higher input costs and output charges due to tariffs, prompting increased purchasing activity and the highest employment growth since September 2022.

 

Factory Orders Soar:

According to the US Census Bureau, new orders for manufactured goods in May jumped by a remarkable 8.2% to $642.0 billion, reversing April’s 3.9% decline. Shipments edged up 0.1% to $599.4 billion, while unfilled orders climbed 3.4% to $1,455.4 billion. Inventories also rose for the seventh time in eight months, reflecting solid underlying demand across the sector.

 

Services Sector Maintains Modest Expansion:

The ISM Non-Manufacturing PMI registered at 50.8 in June, matching its three-month average and indicating slight but stable growth in the services sector. This reading suggests that while the pace of expansion remains modest, the sector continues to avoid contraction, providing a steadying influence on the broader economy.

 

These indicators collectively highlight a US economy that is regaining momentum in manufacturing, holding steady in services, and showing renewed strength in factory activity, despite ongoing challenges from tariffs and cost pressures.

 

Source: S&P Global, US Census Bureau, ISM, PR Newswire, Investing.com