U.S. manufacturing expands in June, factory hiring hits six-year low
Factory output kept rising in June, but factory hiring fell to a six-year low as firms rushed orders, built inventories and braced for higher costs.
Factory employment fell to a six-year low in June even as U.S. manufacturing output kept expanding. S&P Global’s flash survey, based on about 85% of usual responses collected June 12-20, put the manufacturing PMI at 52.0, above the 50 level that separates growth from contraction.
The improvement in production was sharper than the headline index alone suggested. The manufacturing output index climbed to 51.5 from 49.4 in May, while input purchasing rose at the fastest rate in 37 months. Finished-goods inventories also recorded their biggest rise in nine months and one of the strongest increases in the survey’s 18-year history, as factories built stock rather than just filling current demand. S&P Global said output and demand have grown for 29 straight months, and new orders have increased for 14 straight months.
That strength was not spread evenly across the economy. The flash services PMI eased to 53.1 from 53.7, and the composite index slipped to 52.8 from 53.0, keeping overall private-sector growth in expansion territory but less forceful than in the spring. S&P Global said export demand weakened even as domestic demand strengthened, and services exports suffered their largest quarterly contraction since late 2022 in the three months to June.
Hiring told a different story. Factory employment sank to a six-year low, underscoring how quickly manufacturers are pulling back on labor even while they keep output moving. Chris Williamson, S&P Global’s chief business economist, said inflationary pressures had risen sharply in the past two months and that the U.S. outlook remained uncertain. The weak hiring backdrop comes after May, when manufacturing output growth was already the fastest in more than four years and job creation was at its strongest since June 2025.
Manufacturing accounts for roughly 9.4% of the U.S. economy, and the sector is still producing, restocking and taking new orders. But the combination of weaker exports, higher operating costs and a retreat in factory hiring suggests that the second quarter is being propped up by front-loaded purchasing rather than broad-based confidence.
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