U.S. Business Activity Grows at Five-Month High in June, Led by Manufacturing Surge

U.S. business activity expanded at its fastest pace in five months in June, driven by a sharp rebound in manufacturing output, according to the latest S&P Global flash PMI data. The composite PMI rose to 52.2 in June, up from 51.5 in May, marking the highest reading since January. The manufacturing sector led the charge, with the PMI jumping to 55.7—the strongest since May 2022—as factories ramped up production to meet the strongest new orders growth in over four years. The service sector also showed modest improvement, partly boosted by the World Cup, but remained constrained by high prices and weak consumer confidence. “Brighter news out of the Middle East has helped restore some confidence among U.S. businesses in June,” said Chris Williamson, chief business economist at S&P Global Market Intelligence. “While there is better news from the manufacturing sector, we remain concerned as factory growth continues to be temporarily buoyed by inventory building amid supply fears.” Input prices continued to rise, though at a slightly slower pace, while supplier delivery times lengthened. Factories aggressively stockpiled materials, with input buying surging to the second-fastest rate on record. To offset high material costs, firms cut headcounts in both manufacturing and services, with the manufacturing employment index hitting its lowest level since May 2020. Service providers, meanwhile, accelerated price hikes. Despite near-term cost pressures, businesses expressed cautious optimism about easing geopolitical tensions, particularly after the U.S. and Iran signed a memorandum of understanding during the survey period (June 11–22), which raised hopes for a permanent peace deal. The data underscores a two-tiered recovery: manufacturing is firing on all cylinders, but services remain sluggish, held back by inflation and subdued demand.