US factory activity hits 4-year high

The US manufacturing activity rose to its highest level in more than four years in July as strong orders helped factories increase hiring.

The Institute for Supply Management’s manufacturing purchasing managers’ index (PMI) climbed to 55.6 from 53.3 in June, marking its strongest reading since May 2022. A reading above 50 signals growth.

New orders also increased, while manufacturing employment returned to growth for the first time in 33 months. The employment index rose to 52.8 from 49.7.

However, rising costs and supply chain disruptions linked to the Middle East conflict continued to add pressure.

Manufacturers faced higher freight costs, longer delivery times and shortages of key materials, including copper, aluminum and semiconductors. AI-related demand also increased competition for electronics and critical minerals.

The prices-paid index remained elevated at 71.1, raising concerns about persistent inflation and future Federal Reserve interest rate decisions.