ISM Manufacturing Survey Shows Fourth Consecutive Contraction; S&P Data Indicate Faster Expansion

12:46 PM EDT, 07/01/2025 (MT Newswires) -- Two surveys released Tuesday painted a mixed picture of the US manufacturing sector for June, with Institute for Supply Management data showing a fourth straight monthly contraction and S&P Global (SPGI) indicating faster expansion month on month.

The ISM purchasing managers' index edged up to 49 last month from 48.5 in May. A reading below 50 indicates the manufacturing sector is generally contracting. The consensus was for a 48.8 print in a survey compiled by Bloomberg.

The survey's details point to "continued struggles" for domestic manufacturers, Oxford Economics said in remarks e-mailed to MT Newswires. "Demand uncertainty and bartering over who foots the tariff bill are leading to delays or cancellations in orders," Senior Economist Matthew Martin wrote. "Until tariff policies and geopolitical issues fade, this is unlikely to change."

The new orders index fell to 46.4 in June from 47.6 the month prior, while the gauge charting production increased to 50.3 from 45.4. The employment index dropped to 45 from 46.8, indicating deeper contraction, the ISM survey showed.

"This supports our expectations for manufacturing employment to record another decline" in June, Martin said. Government data are expected to show Thursday that the US economy added 120,000 nonfarm jobs last month, compared with a 139,000 gain reported for May, according to a Bloomberg poll.

Separately, S&P Global (SPGI) said Tuesday its manufacturing PMI improved to 52.9 in June from 52 in May, representing the highest reading since May 2022 and indicating a "solid" expansion rate. Output grew for the first time since February, while new orders rose for the sixth consecutive month amid improved domestic and international demand, according to the data provider.

"June saw a welcome return to growth for US manufacturing production after three months of decline," Chris Williamson, chief business economist at S&P Global Market Intelligence, said. "Reviving demand has also encouraged factories to take on additional staff at a rate not seen since September 2022."

However, tariffs continued to weigh on purchasing decisions and prices, according to S&P Global (SPGI). Factories reported "steep cost increases" tied to tariffs that are being passed through to consumers, Williamson said.

"More encouragingly, business confidence has continued to improve from the low-point seen in April, with US manufacturers becoming more optimistic in the face of fewer trade and tariff worries compared to the heightened uncertainty seen in April," Williamson added.

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