US Manufacturing Stays In The Slow Lane In July

What’s going on here?

US manufacturing failed to pick up steam last month, with the ISM manufacturing index dropping to 48.0 in July—missing both June’s 49.0 reading and Bloomberg’s 49.5 forecast.

What does this mean?

An ISM manufacturing index below 50 signals the sector is shrinking, and July’s dip highlights ongoing pressure in American factories. While the headline number was weak, there were some positive developments: measures of new orders, production, and backlogs improved a bit. On the downside, declines in employment and prices paid hint at softer hiring and some cost relief for manufacturers. Since an ISM above 50 is usually good news for industrial stocks, these subdued readings keep investors cautious. It’s a tricky mix—a stronger ISM can cheer stocks, but rapid rebounds tied to rising input prices have sometimes rattled both stock and bond markets in the past.

Why should I care?

For markets: Investors juggle optimism and caution.

July’s sluggish ISM reading left traders wanting more, nudging industrial stocks lower at the open. Softer labor numbers and easing costs help cool inflation fears a bit, but repeated below-50 readings cast doubt on the strength of the sector’s rebound. For now, investors are watching next month’s data closely for any clearer sign of recovery.

The bigger picture: Factory slowdowns echo through the economy.

The ISM manufacturing index is a closely watched indicator for the direction of the US economy. Weak readings can spill over, affecting suppliers, transportation, and consumer demand too. While pockets of growth in orders and production provide some optimism, ongoing contraction points to bigger challenges for the country’s broader economic outlook.

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Originally Posted August 1, 2025 – US Manufacturing Stays In The Slow Lane In July