U.S. manufacturing activity showed mixed signals in July 2024, with major new investments and facility openings occurring against a backdrop of uncertain economic data. While key indicators like the Institute for Supply Management (ISM) Manufacturing PMI and S&P Global U.S. Manufacturing PMI showed contraction and slowing growth respectively, many manufacturers pushed forward with expansion plans.
Billions were committed to new factories and operations across fourteen states, spanning industries from aerospace to food production. Companies like Philip Morris International, Wells Enterprises, and BeiGene made significant investments in new state-of-the-art facilities, pointing to longer-term confidence despite near-term headwinds. Additionally, existing manufacturers like Solar Atmospheres of Michigan moved to upgrade and expand capacities to meet current and future demand.
However, the optimistic news on the investment front contrasts with a manufacturing sector showing signs of broader weakness. New orders, production, and employment measures declined in July across both the ISM and S&P Global PMIs. Prices for raw materials and inputs continue rising even as inflationary pressures show early signs of cooling.
As the sector navigates persistent economic uncertainty, the coming months will indicate whether the major capital commitments made in July represent outliers or a durable trend. However, the range of new facilities and investments underscores the overall resilience and innovative spirit across American manufacturing.
A Month in Data: Perspectives from Different Reporting Agencies
The Institute for Supply Management reported further contraction in the manufacturing sector in July, with its Manufacturing PMI falling to 46.8 percent—the fourth straight month of decline. Key measures like new orders (47.4 percent), production (45.9 percent), and employment (43.4 percent) were all in contraction territory, pointing to generalized weakness. Input prices increased for the seventh straight month (52.9 percent), continuing inflationary pressures even as the rate of growth slowed. Both exports and imports contracted as well.
Similarly, S&P Global’s U.S. Manufacturing PMI fell to 49.6 in July, slipping below the neutral 50 threshold and signaling a slight deterioration versus June. The drop was driven by a solid decrease in new orders, marking the first decline in three months. Output and employment both continued to rise but at substantially softer paces compared to June. On a more positive note, the selling price index hit a one-year low (not specified), with input cost inflation moderating for the second straight month.
While not definitive, the downshifts across critical indexes like new orders and production indicate the manufacturing sector expanded at a slower clip or outright contracted in July based on these influential economic analyses. Lingering inflation continues saddling manufacturers, albeit with early signs of relief. The mixed but mostly downbeat data from ISM and S&P Global sets the stage for determining what it could mean for the manufacturing landscape.
What the Data Means
The July manufacturing data indicates the sector is losing momentum amid a cloudy economic picture. Demand, as represented through new orders, appears to be slowing both domestically and abroad. This aligns with consumer uncertainty as inflation persists and fears of a potential recession loom. However, output remains in expansionary territory per S&P Global, suggesting firms are working through backlogs even as new business softens. Hiring also continues, albeit at weaker levels, showing an ongoing need for labor capacity.
On the inflation front, prices for raw materials and other inputs are no longer accelerating but remain elevated from a historical perspective. Manufacturers continue facing cost pressures but have a bit more breathing room than earlier when price spikes were sharper. Cooling inflation offers a glimmer of hope, though it could take months for increases to meaningfully subside.
Manufacturing leaders are currently navigating high inflation, supply chain stresses, and wavering demand in an unsettled economy. Leaner times may lie ahead, but outright declines have yet to materialize and certain indicators like production point to residual strength. Notably, many manufacturers still push forward with major expansion projects despite the questionable near-term horizon.
New Factory and Manufacturing Announcements
Several major manufacturing investments and facility openings were announced in July, led by:
Philip Morris
Philip Morris International’s $600 million investment in a new Colorado facility to produce smoke-free tobacco products. The site expects to create 500 direct jobs and 1,000 indirect jobs.
BeiGene
BeiGene opened a $800 million biologics plant in New Jersey featuring commercial manufacturing capabilities and a clinical R&D center. Hundreds of new high-tech jobs are projected by the end of 2025.
Wells Enterprises
Wells Enterprises expanded its New York ice cream production facility, increasing its investment from $250 million to $425 million. The project will boost output fourfold and add 270 jobs.
Virgin Galactic
Virgin Galactic completed work on its new manufacturing facility in Phoenix, Arizona where next-generation spaceships will be assembled. Operations are slated to commence in Q1 2025.
Beyond these large projects, other significant new facilities were announced by companies like SeAH Group (Texas), Dialum (Florida), SOMAR (West Virginia), and Morinaga America (North Carolina). Investments ranged from $25 million to nearly $400 million across metals, glass finishing, automotive parts, and food production.
The wide range of industries investing in new plants and upgrades underscores the overall competitiveness of U.S. manufacturing. While economic conditions remain murky, many manufacturers are betting on future demand.
Manufacturers face an obstructed path in the coming months but most remain committed to investing in American production and advanced capabilities. The agility and innovative mindset demonstrated this past month could help the industry navigate any near-term turbulence.
