US ISM Manufacturing Expansion Reaches Fastest Pace Since 2022

In July, US manufacturing activity expanded at the fastest pace in more than four years, mainly thanks to strong demand, surging output, and companies hiring more employees.

The US Institute for Supply Management (ISM) manufacturing index rose to 55.6 in July, marking the highest level since May 2022 and remaining above the expansion threshold for seven consecutive months.

The production index climbed to 58.5, reaching its highest point since the end of 2021; the employment index also indicated that, for the first time since September 2023, manufacturers increased their workforce.

Growth in new orders, a key indicator of demand, also rebounded.

This report also reflects a month of turmoil in the Middle East. The temporary peace agreement between the US and Iran has effectively collapsed, leading to higher oil prices. After a brief pause in fighting, the ongoing five-month war flared up again at the end of the month, with conflict spreading throughout the region.

Factories continue to face extended supplier delivery times and rising raw material prices. The ISM price index dropped to 71.1 in July, marking a five-month low but still significantly above levels at the start of this year.

ISM's export index for July soared to its highest level since March 2022, while the import index rose to its best reading since June 2021.