U.S. manufacturing growth hits four-year high in July as ISM index surges to 55.6

U.S. manufacturing activity expanded in July at the fastest pace since May 2022, with the Institute for Supply Management’s manufacturing index climbing to 55.6. The reading marks the seventh consecutive month of growth and the highest level in over four years, signaling robust demand, a surge in production, and the first increase in manufacturing employment since September 2023. The production subindex rose to 58.5, its highest since late 2021, while new orders growth accelerated, reflecting strong demand. The sector has benefited from resilient consumer spending, solid business investment, and increased government defense spending. However, challenges persist: raw-material costs remain elevated, supply chains face delays, and oil-price volatility—amplified by Middle East tensions—threatens stability. The ISM’s prices index dipped to 71.1 in July, the lowest in five months but still significantly above early-year levels. Export activity hit its highest point since March 2022, while import growth reached its best mark since June 2021. The report comes amid a volatile geopolitical backdrop, with the collapse of a U.S.-Iran interim peace deal and renewed conflict in the region exacerbating supply chain disruptions. Despite these headwinds, the manufacturing sector’s momentum underscores its resilience in the face of economic uncertainty.