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U.S. Manufacturing Struggles Continue as Tariffs, Weak Demand Slow Growth

Manufacturing and Engineering

Business Honor - U.S. Manufacturing Struggles Amid Tariffs & Weak Demand Slowing Growth

Business Honor
02 July, 2025

Manufacturing faces persistent challenges with supply chain delays and rising input costs.

U.S. manufacturing showed little growth in June, with new orders remaining weak and input prices continuing to rise, suggesting that President Trump's tariffs are still hindering businesses' ability to plan effectively. Based on the Institute for Supply Management (ISM), the manufacturing PMI (Purchasing Managers' Index) moved up just a notch to 49.0 in June, compared with the 48.5 recorded in May. However, this is the fourth successive month that the PMI has stayed below the 50-point benchmark that signals contraction in the industry. Manufacturing contributes about 10% to the economy of the U.S., and ongoing stagnation is sending alarm signals regarding sustained growth.

Economists had been looking for a modest improvement, with a predicted reading of 48.8. Manufacturing weakness is being reflected in decelerations in other areas, including housing, consumer expenditures, and increasing joblessness. This is all a picture of an economy in which momentum is losing steam in the second quarter, though a drop in the trade deficit should help produce a probable rebound in GDP.

Tariffs on imports from overseas have triggered a series of distortions, leading to late delivery of raw materials and increased prices. Factories are experiencing supply chain bottlenecks, resulting in increased waiting times for essential materials, even in the face of weak demand. The ISM survey reported consistent delays at American ports, which are compounding problems.

Manufacturers are also facing difficulties in the labor market. The ISM employment indicator declined to 45.0 from 46.8 in May as increased job cuts are noted with companies preparing for unclear demand in the subsequent months. On the whole, the manufacturing sector is facing pressures, with weak demand and rising costs limiting companies from maintaining growth. The future of U.S. manufacturing continues to hinge on sorting out supply chain issues and adapting to the impact of ongoing tariffs.