U.S. factory workers are facing a pullback even as output holds up. In June, job cuts in June ran near their highest levels since 2009, excluding the initial Covid shock, according to S&P Global’s latest survey. Manufacturers have reported cutting staff in three of the past four months, citing costs and weaker demand.
Growth with fewer workers
The same survey shows manufacturing activity still expanding. S&P’s flash manufacturing PMI for June came in at 55.7, up slightly from May and the strongest reading since May 2022. A level above 50 signals growth. Services also edged higher, with a PMI of 51.3, leaving the overall private-sector gauge in expansion territory.
The divergence shows up in the employment detail. In June, manufacturing employment fell to 47.0, the lowest reading since May 2020. S&P Global said manufacturers dominated recent layoffs, which it linked to concerns about the outlook and rising overhead costs, especially raw materials tied to the Middle East conflict.
Factories are also placing new orders and rebuilding inventory to get ahead of possible shortages and price hikes. S&P’s gauge of factory new orders rose to a more than four-year high, and measures of stockpiling and supplier delivery times pointed to longer lead times and continued supply strain.
Official Labor Department data still show manufacturing payrolls up by 23,000 so far in 2026, and overall private payroll growth has been solid. But the survey suggests hiring plans are cooling even as inflation remains elevated and the Federal Reserve keeps its benchmark rate in the 3.50%-3.75% range, with projections pointing to possible increases later this year.
