US manufacturing rises on front-loading of orders, but factory employment tumbles to six-year low. S&P Global said its flash manufacturing PMI increased to 55.7 this month, the highest reading since May 2022, from 55.1 in May.
The preliminary S&P Global US Composite PMI for Jun-26 ticked up to 52.2 from 51.5 in May, marking the fastest expansion in private economic activity since January. While aggregate demand strengthened, new order books reflected highly reactive buying behaviors: services activity captured temporary consumption tailwinds from the start of the FIFA World Cup, while manufacturing demand surged primarily due to clients front-running supply contracts ahead of anticipated Middle East shipping disruptions. This strong orders exacerbated supply chain delays, causing input costs and selling prices to climb at last month’s elevated pace. In turn, employment fell for a second month as companies attempted to cut costs. Looking ahead, firms’ confidence was recorded at the highest since Feb-26.
Activities in the manufacturing sector expanded faster in Jun-26 as the flash Manufacturing PMI rose to 55.7 (May-26: 55.1), against market expectations for a decline to 54.8. The reading reached the highest level since May-22. This milestone confirms a sustained ten-month period of expansion in the industrial sector, demonstrating a steady acceleration from the cyclical low point recorded in Feb-26. While a sharp revival in production and new order books pushed the index higher, underlying survey details indicate that defensive client stockpiling and prolonged supplier delivery delays heavily influenced the headline surge.
Similarly, services sector expansion also accelerated as the flash Services PMI edged higher to 51.3 in Jun-26, a slight improvement from the 50.7 recorded in the prior month and just above the 51.0 market forecast. The latest reading indicated a modest improvement in business activity, the strongest since February, partly linked to the FIFA World Cup tournament. Despite firmer output and new orders, service providers flagged concerns over elevated prices, high interest rates, and weak business and consumer sentiment. Future output expectations improved, though confidence remained below long-term averages amid lingering uncertainty around Middle East conflicts and tariff policy.
MBSB noted that the US economy continued to show resilience, as shown by the stronger expansion in business activities. While high inflation remains one of the key challenges, the PMI reports also highlighted that companies reduced employment to cope with rising costs. In particular, the pace of decline in manufacturing employment in Jun-26 is the steepest since May-20. If the downside risk to the job market persists, this may ease some pressures on the Fed to tighten monetary policy. Market expectations currently price in a high probability for the Fed to hike interest rates in Sep-26.
