US Manufacturing Contraction Deepens in July

U.S. manufacturing activity contracted for the fifth straight month in July 2025, with the ISM Manufacturing Index falling to 48.0, a nine-month low. Factory employment dropped to its lowest level since mid-2020, and the ISM employment index slid to 43.4, marking six consecutive months of job losses. Persistent weak demand, ongoing tariff pressures, and trade policy uncertainty weighed on new orders and output. While some forward-looking indicators, such as new orders, showed minor improvement, most key metrics remain below the expansion threshold. Elevated input costs and tariffs continued to drive higher prices and cautious hiring across the sector. Industry leaders suggest that significant recovery in capital investment and hiring may depend on interest rate cuts and clearer policy direction.