ISM: U.S. Manufacturing Activity Contraction Slows, But Tariffs Continue to Bite

Researched by Industrial Info Resources (Sugar Land, Texas)--Economic activity in U.S. manufacturing improved marginally in June, according to a survey by the Institute for Supply Management (ISM), but remains in contraction territory, as survey respondents indicated U.S. tariffs continue to roil the domestic manufacturing sector.

The ISM's Purchasing Manager's Index (PMI), which tracks 18 manufacturing sectors in the U.S., registered 49% in June, up only slightly from 48.5% in May--which was the lowest reading since November 2024. April registered 48.7%, while March, February and January each saw readings over 50%. Any reading under 50% indicates contraction in the manufacturing economy.

Survey respondents expressed ways the tariffs were impacting operations. One from the Fabricated Metal Products sector said, "business has notably slowed in last four to six weeks. Customers do not want to make commitments in the wake of massive tariff uncertainty." Another from Machinery said, "The tariff mess has utterly stopped sales globally and domestically. Everyone is on pause. Orders have collapsed."

A respondent from Computer & Electronic Products added tariffs were causing uncertainty for long-term procurement decisions. "The situation remains too volatile to firmly put such plans into place."

"In June, U.S. manufacturing activity slowed its rate of contraction, with improvements in inventories and production the biggest factors in the 0.5 percentage point gain," Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said in a related summary of findings. Still, she said other indexes used to determine demand, output (e.g. employment) and inputs (e.g. prices) showed further contraction.

The New Orders and Backlog of Orders indexes contracted at faster rates. Regarding output, although production increased month-over-month and now is in expansion territory, the Employment Index contracted further. "The mixed indicators in output suggest companies still being cautious in their hiring even with an increase in production."

As far as inputs go, "tariffs-induced prices growth accelerated."

For more information on May's PMI, which also indicated tariffs are affecting manufacturing activity, see June 4, 2025, article - ISM: U.S. Manufacturing Activity Reaches Lowest Level Since November.

Still, Industrial Info is tracking billions' worth of capital Industrial Manufacturing Industry projects in the U.S. that are planned to kick off from July through September, although not all of the projects will move forward as scheduled. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for a full list of projects.

This includes high-dollar data center construction projects from tech giants such as Meta Platforms Incorporated (Menlo Park, California) and Amazon.com Incorporated (Seattle, Washington).

Meta projects on track to kick off this summer include a $800 million Phase III expansion at its Temple Hyperscale Data Center Campus in Texas, which involves a 450,000-square-foot building, and Phase 1 of a grassroot data center in Tulsa, Oklahoma--part of a two-building campus. JE Dunn Construction Company (Kansas City, Missouri) is providing general contractor services for both projects, which are expected to wrap up in late 2026 and mid-2028, respectively.

Meanwhile, two Amazon projects set to wrap up in mid-2026 include Phase IV of its data center campus in Hermiston, Oregon--adding a 215,453-square-foot building and 36 megawatts (MW) of load capacity--and the grassroot Phase I at its CMH205 data center campus in Jeffersonville, Ohio. The initial data center building in Jeffersonville will provide about 100 MW of capacity as part of a multi-phase, multi-building, 1.5-gigawatt (GW) campus.

Subscribers can click here for the four project reports.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).