The US manufacturing sector expanded again in June, with operating conditions improving to the greatest degree in over three years. Output increased for the first time since February, and to a solid degree, whilst new orders increased for a sixth successive month due to improved domestic and international demand.
However, tariffs remained a prevalent theme, notably affecting purchasing decisions and prices. Latest data showed manufacturers raising their input buying activity to the greatest extent since April 2022, at times reflective of efforts to build up inventories given ongoing trade and price uncertainty.
Nonetheless, input costs still rose sharply, with inflation hitting its highest level for nearly three years. A similar trend was seen for output charges, which rose to the greatest degree since September 2022.
The headline index from the report, the seasonally adjusted S&P Global US Manufacturing Purchasing Managers’ Index (PMI), improved to 52.9 in June, from 52.0 in May.
The latest reading was the highest since May 2022, and indicative of a solid rate of expansion. It was also the sixth successive month in which the PMI has posted above the critical 50.0 no-change mark.
Manufacturers recorded a first rise in production for four months. Tariffs also impacted purchasing and prices during June. There was some notable upward pressure on input prices during June, with inflation accelerating to its highest in just under three years.
There was some notable upward pressure on input prices during June, with inflation accelerating to its highest in just under three years. A relatively positive outlook also helped to underpin a rise in employment during June.