U.S. ISM Manufacturing Index (June 2026)

ISM Manufacturing Index Shows Expansion Continues 

• The ISM Manufacturing PMI eased from 54.0 to 53.3 in June, but remained in expansion for a sixth straight month; 5% of manufacturing GDP was in contraction, up from 2% in May, and 14 of 18 industries reported growth.  
• Demand cooled but stayed solid: new orders slipped to 56.0 from 56.8, still comfortably above the 50-threshold.
• Customer inventories remained very lean at 42.3, suggesting firms may still need to rebuild stockpiles. 
• Price pressures eased sharply, with the prices index dropping from 82.1 to 73.0, while supplier deliveries fell to 57.4 from 60.6. 
• Employment improved to 49.7 from 48.6, but remained modestly in contraction territory. 
• Respondents still sounded cautious on prices despite the improvement. One respondent commented that "the conflict in Iran has impacted pricing in every category of raw materials," while another said that "input costs remain elevated across key categories, driven largely by Middle East conflict impacts and ongoing tariff uncertainty."  

Key Implications

• The sharp decline in the prices index is the most positive signal in the report. Input-cost pressures remain elevated, but the June pullback suggests some relief from the commodity and supply-chain disruptions that intensified earlier in the quarter. That should ease concern that manufacturing-sector inflation pressures are reaccelerating, even if price levels are still high enough to keep firms cautious on costs and margins. The simultaneous decline in supplier delivery times is a hint that the worst of price pressures and supply chain disruptions may be behind us.  
• The broader message is still constructive, even with softer momentum. Demand and production cooled from May, and employment remains a soft spot, but new orders are still expanding and lean customer inventories should help support factory activity through the summer. In other words, the report points less to a broad manufacturing slowdown than to a sector that is still growing, but at a more measured pace as firms work through cost pressures and uneven demand conditions. 

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