U.S. manufacturing showed signs of stability in June 2025, even as the sector continued to navigate economic headwinds. Key indicators painted a mixed picture: The S&P Global PMI climbed to its highest level in years, signaling modest growth, while the ISM PMI remained just below the expansion threshold. Demand conditions appeared to hold steady in June, with fresh momentum emerging in areas like clean energy, advanced materials, food production, and life sciences.
At the same time, manufacturers faced ongoing challenges from tariff-driven cost pressures and cautious customer spending. Notably, corporate America’s commitment to domestic production remained strong – evidenced by a wave of new factory announcements that signal strong and diversified investment across the country. Overall, June’s data and developments suggest a sector straddling the line between cautious optimism and persistent caution.
A Month in Manufacturing Data
Perspectives from ISM Report
According to the Institute for Supply Management, manufacturing activity contracted for a fourth straight month in June, albeit at a slightly slower pace. The ISM Manufacturing PMI registered 49.0% for June, up from 48.5% in May. This small uptick kept the index just below the 50% mark that separates growth from contraction, indicating the sector is still contracting but inching toward stabilization.
The ISM report underscored weak demand: the New Orders Index fell to 46.4% (its fifth consecutive month of decline) and order backlogs shrank further (Backlog of Orders at 44.3%). On a brighter note, production picked up: the Production Index jumped nearly five points to 50.3%, returning to slight growth after contracting in May. Prices for inputs surged once again, with the Prices Index at 69.7%, reflecting steep cost increases largely attributed to raw material inflation and tariffs.
Insights from S&P Global PMI
In contrast to the ISM, the S&P Global U.S. Manufacturing PMI told a more upbeat story for June. The index came in at 52.9, up from 52.0 in May, marking the sixth consecutive month of expansion in factory activity. In fact, June’s reading was a three-year high for the S&P PMI, indicating the strongest improvement in operating conditions since 2022. Survey data pointed to broad-based gains: output rose solidly as order book growth was sustained, driven by rising demand from both domestic and export customers.
This revival in orders encouraged manufacturers to ramp up production and hiring – factories added workers at the fastest pace since September 2022 to keep up with workloads. The S&P report also noted that new orders expanded for a second straight month, including modest growth in export orders, reflecting an uptick in demand despite elevated prices. However, it wasn’t all clear skies in the S&P survey. Respondents highlighted that some of June’s improvement was fueled by inventory building ahead of anticipated tariffs, which could lead to payback in the form of slower growth later in the year.
What the Data Means
June’s data highlights a U.S. manufacturing sector that is nearing an inflection point. The divergence between the two PMI measures underscores the fragile and uneven nature of the recovery. On one hand, S&P Global’s index suggests that factory activity is expanding at a decent clip, buoyed by improving order flows and a burst of production to rebuild inventories. On the other hand, ISM’s index – still just below 50 – indicates many manufacturers are experiencing ongoing contraction, especially in new orders.
In practical terms, the factory sector is flatlining rather than booming, with growth in some corners offset by softness in others. Importantly, both surveys point to lingering headwinds that could cap any nascent rebound. Customer demand, while showing hints of life, remains far from robust – companies report that high prices and economic uncertainty are still making clients cautious about placing new orders. The fact that ISM’s New Orders Index is stuck in the mid-40s implies that underlying demand is tepid, even if production got a one-time lift.
Encouragingly, business sentiment has improved from the lows seen earlier in the year. S&P’s survey commentary noted that manufacturers’ confidence ticked up in June as some trade uncertainties eased compared to the spring. Fears that dominated in April have somewhat abated, and firms are cautiously hopeful about the future. However, that optimism remains guarded. Many producers are still in “wait-and-see” mode regarding trade negotiations and broader economic trends, aware that any number of factors – from stalled tariff talks to higher interest rates or a dip in consumer spending – could put the brakes on the recovery.
Major New Factory and Expansion Announcements
Even as manufacturing output only inched forward, long-term investment in U.S. production capacity surged ahead in June. Several major companies unveiled plans for new factories or facility expansions, representing billions of dollars in domestic manufacturing investment and thousands of new jobs. Below we spotlight a few of the most significant manufacturing developments of June 2025:
Heliene’s New Solar Module Plant in Minnesota
Canadian-American solar manufacturer Heliene, Inc. celebrated the grand opening of a new solar panel production facility in Rogers, Minnesota. The state-of-the-art plant (Heliene’s third U.S. manufacturing line) expands the company’s U.S. solar PV module output to 1.3 gigawatts annually and will create over 220 new jobs in the Minneapolis–St. Paul region. This Rogers facility, with a capacity of 500 MW, nearly doubles Heliene’s domestic production capability.
Zoox’s First Robotaxi Production Facility in California
Amazon-owned Zoox made headlines by opening the first purpose-built robotaxi production plant in the United States. The 220,000-square-foot facility in Hayward, California is dedicated to manufacturing Zoox’s cutting-edge autonomous electric robotaxis. This marks a significant milestone in the development of self-driving vehicle technology – never before has a factory been solely devoted to serial production of fully autonomous vehicles. Zoox’s new plant will serve as the launchpad for its futuristic shuttle-like robotaxis, which are designed for urban ridesharing.
Farmina’s $115 Million Pet Food Factory in North Carolina
Global pet nutrition company Farmina officially opened its first U.S. manufacturing facility in Reidsville, North Carolina, bringing a new high-end pet food production hub stateside. The Italian-based firm invested $115 million to build a 150,000-square-foot plant that will produce Farmina’s premium pet food lines for the North American market. The facility is expected to create around 200 jobs over the next five years (with 75 positions already filled).
In total, these three projects – spanning renewable energy, next-gen transportation, and food products – showcase the robust investment flowing into U.S. manufacturing. And they were hardly the only industrial moves in June. Other companies also launched major facilities or expansions: for example, Alstom opened a $75 million rail car plant in upstate New York (adding 250 jobs in the rail equipment sector), and Danone North America announced a $65 million expansion of its Jacksonville, Florida beverage facility to boost coffee creamer production (nearly 200 new jobs).
The wave of factory building – bolstered by public incentives and the push for supply chain resiliency – is a long-term vote of confidence in U.S. manufacturing, even as the sector contends with near-term challenges.
Future Outlook
Looking ahead, the U.S. manufacturing sector appears to be at a delicate crossroads. On one side of the ledger, there are reasons for optimism. The pickup in orders and production seen in early summer suggests that demand for manufactured goods might be gradually firming after an extended slump. If inflationary pressures can be contained and consumer/business confidence continues to improve, we could see a slow but steady rebound take hold in the second half of 2025.
The substantial capital investments announced in recent months – from new semiconductor fabs to electric vehicle plants – will begin coming online in 2025–2026, adding capacity and jobs that could bolster output over the medium term. Indeed, the billions committed to new factories (often incentivized by industrial policy) indicate that many companies expect solid U.S. growth in the years ahead. This expanding industrial base, coupled with easing supply chain constraints, could help the manufacturing sector regain momentum if underlying economic conditions stay favorable.
That said, significant risks and uncertainties temper the outlook. A key wildcard is trade policy: the tariff skirmishes and negotiations underway have the potential to either relieve cost pressures or exacerbate them. As of June, manufacturers were awaiting clarity on trade deals and the fate of paused tariffs – many firms remain cautious until they see whether new agreements are reached by upcoming deadlines.
In short, a cautious optimism prevails. Manufacturers can take heart that the sector seems to be stabilizing rather than deteriorating, and that major new investments are setting the stage for future growth. Barring an adverse shock, the second half of 2025 may see U.S. factories gradually pull out of their holding pattern, especially if inflation continues to recede and supply chains normalize. However, the path is unlikely to be smooth. Business planners should be prepared for a “bumpy ride” in the short run, and remain agile in the face of shifting policy and market dynamics.
The long-term trajectory still points upward – a reenergized and more resilient U.S. manufacturing base is emerging – but the coming months will be critical in determining how fast and firmly the sector can advance along that path. For now, June’s mixed signals and big investments both serve as reminders: American manufacturing’s renaissance is underway, but it must weather a few more storms on the journey to sustained growth.
