ISM Manufacturing PMI — July 2025
Headline: The Manufacturing PMI fell 1.0 point to 48.0, signaling contraction for a fifth consecutive month. It was below the trailing six-month average of 49.4 and marked a six-month low, below the prior six-month range of 48.5–50.9. Manufacturing remained in contraction below its 50.0 breakeven, but the 48.0 reading was above the broader-economy breakeven of 42.3, consistent with an overall growing economy.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo |
|---|---|---|---|---|---|
| New Orders | 47.1 | 46.4 | +0.7 | Contracting | below avg (48.3) |
| Production | 51.4 | 50.3 | +1.1 | Growing | above avg (48.5) |
| Employment | 43.4 | 45.0 | -1.6 | Contracting | 6-mo low |
| Supplier Deliveries | 49.3 | 54.2 | -4.9 | Faster | 6-mo low |
| Inventories | 48.9 | 49.2 | -0.3 | Contracting | below avg (49.3) |
| Customers' Inventories | 45.7 | 46.7 | -1.0 | Too Low | below avg (46.0) |
| Prices | 64.8 | 69.7 | -4.9 | Increasing | below avg (65.9) |
| Backlog of Orders | 46.8 | 44.3 | +2.5 | Contracting | above avg (45.2) |
| New Export Orders | 46.1 | 46.3 | -0.2 | Contracting | below avg (47.1) |
| Imports | 47.6 | 47.4 | +0.2 | Contracting | below avg (48.0) |
Key moves:
- The headline PMI and Employment both reached six-month lows; Employment fell to 43.4, indicating faster manufacturing job shedding.
- Supplier Deliveries dropped 4.9 points to 49.3, a six-month low and a move from slower to faster deliveries, consistent with less supply-chain congestion or softer demand.
- Production rose 1.1 points to 51.4, above its six-month average and remaining in expansion, despite New Orders staying below 50.
Insights:
- The modest improvement in New Orders to 47.1 is directionally positive but remains contractionary and below its six-month average. Backlogs improved 2.5 points to 46.8, yet remain in contraction after 34 months, limiting evidence of a durable demand recovery.
- Manufacturers’ inventories fell to 48.9, while New Orders remained weak; this does not suggest deliberate stocking ahead of stronger demand and instead reflects continued inventory restraint amid a soft order pipeline.
- Customers’ Inventories at 45.7—“too low” and below the six-month average—is a constructive forward signal: lean downstream stocks could support future replenishment orders, although that has not yet lifted New Orders above 50.
- Faster Supplier Deliveries at 49.3 contrasts with the still-growing Production index and points away from broadening delivery constraints; combined with weak Employment, the overall signal is more consistent with slack than with capacity pressure.
- Prices remained firmly inflationary at 64.8, but eased 4.9 points and fell below their six-month average, indicating persistent input-cost pressure with some moderation in goods-inflation and margin risk.
Breadth & prices: Seven industries reported growth and none were listed as contracting. Input prices continued increasing, but at a slower rate.
Takeaway: July’s print portrays a manufacturing cycle still in contraction, with the headline and labor components weakening to six-month lows despite a modest production rebound. Lean customer inventories and improving backlogs offer potential support for future activity, but persistently sub-50 orders, exports and imports point to a fragile near-term macro outlook.