Manufacturing Stays Sluggish

The manufacturing sector remained stuck in contraction mode in July, according to ISM’s latest data, with the PMI at 48.0—marking five consecutive months below growth territory. Seven industries managed to expand, but major sectors like machinery, transportation equipment, and electronics continued to decline. Tariffs and economic uncertainty weighed heavily on production planning and supplier sourcing. New orders and backlogs contracted further, employment fell sharply, and supplier deliveries sped up after months of slowing. Prices rose but at a slower pace, while inventories dipped as companies worked through stockpiles accumulated earlier this year.

ISM’s CEO flagged July as slightly worse than June, noting that 76% of manufacturing GDP contracted. Tariffs remain a major disruptor, and most panelists point to them as their number one issue. Looking ahead, a potential Fed rate cut in September could provide much-needed stimulus by stabilizing demand and encouraging hiring. Manufacturers are eyeing the next few months for signs of recovery, particularly in new orders and backlogs, which drive production cycles.

TLC thrives in volatile markets, and this environment is no exception. We are leveraging our expertise to adjust quickly and support clients as they navigate tariff impacts and shifting supply chain conditions.

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