S&P Global Manufacturing July PMI final 49.8 versus 49.5 preliminary | investingLive

• S&P Global Manufacturing PMI final 49.8 versus 49.5 preliminary

Details Summary:

Operating conditions in the U.S. goods-producing sector worsened slightly in July, marking the first contraction of 2025. The headline PMI fell to 49.8, down sharply from June’s 52.9, ending a six-month run of growth.

Key takeaways:

• Demand & Orders: Market demand stagnated. New orders rose only marginally—the weakest pace this year—while new export orders declined for the first time in three months, with reduced sales to China, the EU, and Japan.

• Tariff Uncertainty: Ongoing trade policy concerns weighed heavily on business sentiment and client decision-making.

• Employment: Firms showed hiring reluctance amid weak demand and cost control pressures. Employment fell for the first time since April.

• Inventories: Companies reduced stock holdings and relied more on existing inventory, as previous tariff-related stockpiling faded.

• Pricing Pressures:

  • Input costs remained high due to tariffs, but inflation eased from June’s three-year peak.

  • Selling prices continued to rise steeply, posting the second-largest monthly gain since November 2022.

• Production: Output growth slowed and was only marginal overall.

• Business Confidence: Outlook weakened to a three-month low, though firms still expect output to rise over the next year.

• Supply Chains: Conditions improved slightly, with input delivery times shortening for the first time since September 2024—thanks to better stock availability and reduced vendor backlogs.

Bottom line: July’s data reflect a fragile manufacturing sector facing demand stagnation, policy uncertainty, and lingering cost pressures—though easing inflation and improving supply chains provide some hope for stabilization

Chris Williamson, Chief Business Economist at S&P
Global Market Intelligence said

“July saw the first deterioration of manufacturing
operating conditions since last December as
tariff worries continued to dominate the business
environment.

“The downturn at the start of the third quarter in part
reflects the passing of a busy period of tariff-related
inventory accumulation in prior months. Factories
reported little change in inflows of new orders and
reduced stock holdings of both raw materials and
finished goods in July. This comes after companies had
built up inventories in May and June amid concerns over
higher import prices and worsening supply availability
resulting from tariff hikes.

“Input prices continued to rise at a steep rate, with these
higher costs often being passed on to customers to
drive another month of elevated selling price inflation,
but there are signs that these price pressures may have
peaked back in June.
“Optimism about the year ahead has meanwhile taken
a knock as factories worry about reduced demand
from customers, especially in export markets, and the
inflationary impact of tariffs. Employment consequently
fell as factories trimmed headcounts amid concerns
over rising costs and lower sales.”