U.S. Manufacturing Jobs Suffer Worst Decline Since Pandemic... Impact of Iran War, Tariffs

Employment Index Falls to 47.0 in June, Down 4.6 Points from Previous Month

Manufacturing Expansion Reaches Highest Level in Four Years

Production Rises While Jobs Decline

Cost Pressures Remain High

Manufacturing employment in the United States has declined at its fastest pace since the early days of the COVID-19 pandemic. Analysts attribute the pressure on factory jobs to supply chain instability stemming from the Iran war, rising raw material costs, and uncertainty surrounding tariff policies.

On June 23 (local time), S&P Global announced that the employment sub-index of the U.S. Purchasing Managers’ Index (PMI) for June fell to 47.0 from 51.6 in May.

For PMI sub-indices, a figure above 50 indicates an increase compared to the previous month, while a value below 50 indicates a decrease. The manufacturing employment index dropping to 47 marks its lowest level since May 2020.

A worker is stocking products at a store located in New York. New York (USA) – Photo by Yoonju Hwang

However, manufacturing activity itself continued to expand. The U.S. manufacturing PMI for June rose to 55.7 from 55.1 in May, reaching its highest point since May 2022. The manufacturing output index also climbed from 56.6 to 57.7, recording its highest level since July 2021.

Nevertheless, S&P Global explained that this expansion in manufacturing is partly due to preemptive orders and inventory accumulation prompted by concerns over supply disruptions and price increases related to the Iran war, rather than an actual recovery in demand.

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, stated, “The most concerning issue is the further decline in employment, which is especially pronounced in manufacturing.” He added, “Excluding the impact of COVID-19, the reduction in factory jobs is happening at the fastest pace since 2009,” noting that concerns over whether the recent recovery in demand can be sustained and the burden of rising raw material costs are both being reflected.

Williamson also assessed that, given the current level of production, it will be difficult for the U.S. economy to achieve growth in the second quarter that significantly exceeds an annualized rate of 1%. While the service sector has slowed due to high prices, elevated interest rates, and low consumer confidence, the manufacturing sector is being supported by preemptive demand arising from supply chain instability.

Cost pressures also remain strong. S&P Global reported that although the pace of input cost increases slowed in June compared to May, it was still the third-highest level since 2023. The rate of increase in manufacturing input costs has come down from the recent peak in May, but it was still the second-highest in nearly four years. The pace of sales price increases also remained at the same high level as in May.

President Trump, since taking office, has made the revival of manufacturing a core economic agenda, highlighting large-scale investment announcements as major achievements. However, aside from a few beneficiary sectors such as AI data centers, defense, and steel, manufacturers are voicing concerns over rising raw material costs and frequent policy changes. The Financial Times, citing official statistics, reported that factory employment in the U.S. has fallen by 77,000 jobs since the start of Trump’s second term.

The momentum for manufacturing investment is also weakening. According to data from the U.S. Census Bureau compiled by the St. Louis Fed, private manufacturing construction spending in April, on a seasonally adjusted monthly basis, was $15.15 billion. The Financial Times reported that this figure is down about 16% since January 2025.

This content was produced with the assistance of AI translation services.