U.S. factory output reaches four-year peak as AI drives sector growth
July saw U.S. manufacturing output climb to its highest level in over four years, with the PMI rising to 55.6 and employment nearing a three-year high.
Data from the Institute for Supply Management indicated that U.S. manufacturing activity surged in July, pushing the PMI to 55.6, the highest level since May 2022 and well above economists' forecast of 54. The rise reflects strong order growth and was observed in fifteen distinct industries, including electrical equipment, appliances, primary metals, transportation equipment, machinery and computer and electronic products.
The technology sector’s performance was especially driven by investments in artificial-intelligence infrastructure. While the overall picture was positive, respondents to the ISM survey expressed worries about the ongoing war in Iran, volatile pricing and the likelihood that the Federal Reserve could raise interest rates as early as next month. Manufacturing employment also approached its strongest level in nearly three years, underscoring the sector’s expanding labor demand.
Why it matters
Stronger factory output and hiring signal a robust U.S. economy, but lingering geopolitical and monetary risks could temper growth.
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