U.S. Manufacturing Activity Surges Beyond Expectations, But Factory Employment Falls to Six-Year Low

Driven by companies placing orders in advance to prevent shortages and price increases, U.S. manufacturing activity expanded again in June. However, factory employment fell to a six-year low, primarily due to rising operational costs influenced by conflicts in the Middle East. The preliminary S&P Global Manufacturing PMI for June rose to 55.7 from 55.1 in May, marking the highest level since May 2022, while economists surveyed by Reuters had previously expected the index to drop to 54.8. The increase in the manufacturing PMI, combined with a rise in the services PMI from 50.7 in May to 51.3, contributed to a composite PMI output index increase from 51.5 last month to 52.2. The rebound in the services PMI is partially attributed to the World Cup events jointly hosted by the U.S., Canada, and Mexico.