FX.co ★ U.S. Manufacturing Sector Contracts as PMI Drops Below Growth Threshold

In an unexpected turn of events, the United States Manufacturing Purchasing Managers' Index (PMI), compiled by S&P Global, fell below the growth threshold in July 2025. This shift marks the sector's first contraction in months, with the PMI slipping from 52.9 in June to a concerning 49.5 in July.

A PMI reading above 50 generally indicates expansion in the manufacturing sector, while a reading below 50 signals contraction. The significant drop in July's PMI data, released on July 24, suggests that the sector is encountering headwinds that might be linked to demand fluctuations or supply chain disruptions. The 3.4-point decline surprised analysts who had anticipated a more stable performance, particularly given the gradual recovery post-pandemic.

This contraction could potentially pose challenges for the U.S. economy, as manufacturing is a critical component of economic growth. Stakeholders in the sector will be closely monitoring this trend in the coming months, hoping for a rebound as companies adjust their strategies to navigate the evolving economic landscape.