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Manufacturing activity expands, wood and furniture fall behind in latest PMI report

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Manufacturing activity expands, wood and furniture fall behind in latest PMI report July 2, 2026 | 9:14 am CDT

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Manufacturing activity expands, wood and furniture fall behind in latest PMI report

Dakota Smith

July 2, 2026 | 9:14 am CDT

TEMPE, Ariz., Economic activity in the manufacturing sector expanded in June for the sixth consecutive month, say the nation’s supply executives in the latest ISM Manufacturing PMI Report. The report was issued by Susan Spence, MBA, chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee.

“The Manufacturing PMI registered 53.3 percent in June, 0.7 percentage point lower than in May. The overall economy continued in expansion for the 20th month in a row. (A Manufacturing PMI above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index expanded for the sixth consecutive month after four straight readings in contraction, registering 56 percent, down 0.8 percentage point compared to May’s figure of 56.8 percent. The June reading of the Production Index (52.2 percent) is 2.1 percentage points lower than May’s reading of 54.3 percent. The Prices Index remained in expansion (or ‘increasing’ territory), registering 73 percent, a 9.1-percentage point decrease from May’s reading of 82.1 percent. The Backlog of Orders Index registered 50.5 percent, down 1.7 percentage points compared to the 52.2 percent recorded in May. The Employment Index registered 49.7 percent, up 1.1 percentage points from May’s figure of 48.6 percent,” says Spence.

Spence continues, “In June, U.S. manufacturing activity remained in expansion territory, growing at a slightly slower pace as compared to the month before. Of the five subindexes that make up the PMI, the New Orders and Production indexes grew slower as compared to the previous month, the Supplier Deliveries Index slowed at a slower rate, and the Employment and Inventories indexes improved with the latter entering expansion territory.

“In June, 34 percent of the comments were positive and 66 percent negative, with a 1-to-1.9 ratio of positive to negative sentiment. Among negative comments, the Iran war was mentioned in 31 percent and tariffs in 17 percent; 50 percent of the panelists mentioned pricing volatility as an issue for their companies.

“In June, two of four demand indicators (New Orders and Backlog of Orders) were in expansion, and the Customers’ Inventories Index remained in ‘too low’ territory, contracting at a faster rate. A ‘too low’ status for the Customers’ Inventories Index is usually considered positive for future production. New Export Orders returned to contraction, losing 2.1 percentage points since May.

“Regarding output, the Production Index is in expansion for the eighth month in a row, and the Employment Index increased by 1.1 percentage points but remained in contraction. Among panelists, 36 percent indicated that managing head counts remains the norm at their companies, while 64 percent are hiring, a near reversal of those numbers from the start of the year (66 percent of companies were managing staff levels in the January report).

“Finally, inputs (defined as supplier deliveries, inventories, prices, and imports) were mixed, with the Supplier Deliveries Index decreasing 3.2 percentage points, the Inventories Index entering into expansion, the Imports Index losing 0.1 percentage point but staying in expansion, and Prices Index relief coming with a 9.1-percentage point drop, a reading of 73 percent versus 82.1 percent in May.

“Looking at the manufacturing economy, 5 percent of the sector’s gross domestic product (GDP) contracted in June, compared to 2 percent in May, and the percentage of manufacturing GDP in strong contraction (defined as a composite PMI of 45 percent or lower) was 3 percent, compared to 2 percent in May. The share of sector GDP with a PMI at or below 45 percent is a good metric to gauge overall manufacturing weakness. All but one (Petroleum & Coal Products) of the six largest manufacturing industries expanded in June, in the following order: Computer & Electronic Products; Machinery; Transportation Equipment; Chemical Products; and Food, Beverage & Tobacco Products.”

The 14 manufacturing industries reporting growth in June, listed in order, are: Printing & Related Support Activities; Electrical Equipment, Appliances & Components; Textile Mills; Primary Metals; Apparel, Leather & Allied Products; Fabricated Metal Products; Computer & Electronic Products; Machinery; Plastics & Rubber Products; Transportation Equipment; Nonmetallic Mineral Products; Chemical Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The three industries in contraction are: Paper Products; Furniture & Related Products; and Wood Products.

Wood product contracted in:

Production.

New orders.

Inventories.

Backlog of orders.

New export orders.

Furniture & related products contracted in: 

New orders.

Production.

Prices.

Wood products grew in: 

Customer inventories.

Prices.

Imports.

To read the full report, visit ismworld.org.

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About the author

Dakota Smith

| Assistant Editor

Dakota is an assistant editor at Woodworking Network, avidly exploring the woodworking industry.

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