American manufacturing expanded for a seventh consecutive month in July, with factory output reaching its strongest level since 2021 and employment returning to growth for the first time in nearly three years.
By yourNEWS Media Newsroom
American manufacturing strengthened in July at its fastest pace in more than four years as factories increased production, added workers and reported continued growth in new orders, according to the latest Institute for Supply Management survey.
The institute’s manufacturing index rose to 55.6 in July, its highest reading since May 2022 and above economists’ expectations. A reading higher than 50 indicates expansion, while a result below that level signals contraction.
July marked the seventh consecutive month in which the manufacturing sector remained above the expansion threshold, providing further evidence that the nation’s factories have gained momentum during 2026.
The production component of the survey climbed to its strongest level since late 2021, indicating that manufacturers substantially increased output to meet growing demand. New orders expanded for the seventh month in a row, suggesting that businesses continued receiving enough work to support future production.
Manufacturing employment also returned to growth for the first time since September 2023. The improvement in factory payrolls followed an extended period in which manufacturers remained cautious about hiring despite changes in demand and production.
Of the 16 manufacturing industries monitored by ISM, 15 reported expansion during July. Chemical products was the only category to contract.
The chemical-products category includes fuel manufacturing, and its decline may have been connected to the sharp reduction in gasoline prices.
Several economic forces have contributed to manufacturing’s improvement this year. The Trump administration’s tariffs have encouraged companies to reconsider overseas supply chains and place greater emphasis on producing goods inside the United States.
The administration has argued that tariffs can protect domestic manufacturers from lower-cost foreign competition, discourage offshoring and create incentives for businesses to expand American factories.
A surge in artificial intelligence investment has also generated demand for semiconductors, electrical systems, networking equipment, power infrastructure and other components required to construct and operate data centers.
One machinery manufacturer surveyed by ISM said AI-related infrastructure projects had moved beyond planning and into large-scale purchasing and production.
“Now that it seems the buildout of AI infrastructure globally is nearing real activation, products going into data centers are at full procurement and manufacturing ramp-up. Thus, demand for our semiconductor end products and connectivity (power, networking and photonics) is booming,” the manufacturer said.
Tax-code changes enacted last year have provided another source of support for domestic producers. Those provisions allow businesses to immediately deduct certain capital investments rather than spreading the deductions over longer periods.
The ability to expense investments can lower the initial cost of purchasing equipment, expanding plants and adopting new technology. Supporters of the changes say those incentives make it more attractive for companies to modernize facilities and increase production inside the country.
July’s employment increase, production surge and continued growth in orders indicate that the manufacturing recovery has broadened beyond a single measure. The gains occurred across nearly every industrial category tracked by ISM, while the headline index reached a level not recorded since 2022.
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