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US Manufacturing Surges: New Orders Hit 4-Year High
25 Jun
Summary
- Manufacturing output expanded fastest since July 2021.
- Service sector growth remains sluggish due to high prices.
- Factory job cuts reached highest level since 2009.
In June, U.S. manufacturing activity expanded at its quickest pace since July 2021. This surge was propelled by new orders reaching a four-year peak, influenced by concerns over supplies amidst ongoing conflicts. Despite this manufacturing strength, the service sector, which fuels over 75% of U.S. economic growth, exhibited sluggish expansion.
Service providers cited elevated prices, higher interest rates, and low business and consumer confidence as key factors. Manufacturing output and new orders saw growth, yet employment in factories experienced a notable decline, marking the highest level of job cuts since 2009. Economists have tempered their 2026 GDP growth forecasts, with persistent geopolitical conflict identified as a primary concern.
Despite economic headwinds, a recent easing of tensions in the Middle East has somewhat boosted confidence among U.S. businesses. However, current output levels suggest the economy is struggling to achieve growth significantly exceeding a 1% annualized rate in the second quarter.
