US factory activity expands at strongest pace since 2022, signaling potential tailwinds for risk assets

American factories are humming again. The Institute for Supply Management’s Manufacturing PMI climbed to 55.6 in July, up from 53.3 in June, marking the strongest reading since May 2022. Analysts had expected 54.0, so the beat wasn’t subtle. The numbers behind the surge Production surged to 58.5, its highest level since November 2021. New orders came in at 56.7, suggesting demand isn’t just holding steady but actively accelerating. Perhaps the most encouraging detail: employment returned to expansion territory at 52.8, the first time the employment sub-index has shown growth since January 2025. On the cost side, the prices index actually dipped to 71.1 from 73.0 in June. Still elevated, but the direction is right. July marks the seventh consecutive month of manufacturing expansion, a streak that looks even more notable given the sector endured 10 straight months of contraction before this run began. The broader economy, meanwhile, has been expanding for 21 continuous months. ISM committee chair Susan Spence pointed to a rebound in employment and noted that companies have been front-loading orders due to supply chain concerns. Supplier deliveries have now shown prolonged slowdowns f...