The June ISM manufacturing PMI report printed slightly better than expected results, as the index climbed from 48.5 to 49.0 during the month. While the reading reflected an improvement, it still remained below the 50.0 threshold and indicated industry contraction.
Key Takeaways from the June ISM Manufacturing Report
- Manufacturing PMI rose to 49.0% from 48.5% in May, showing modest improvement but remaining in contraction territory for the fourth straight month
- Production index returned to expansion at 50.3%, up significantly from May’s 45.4%, representing the only bright spot in an otherwise mixed report
- New orders deteriorated further, falling to 46.4% from 47.6% in May, marking the fifth consecutive month of contraction following a brief three-month expansion period
- Employment weakness deepened, with the index dropping to 45.0% from 46.8%, indicating manufacturers continue prioritizing cost management over hiring
- Price pressures intensified, with the Prices Index climbing to 69.7% from 69.4%, driven primarily by tariff-induced cost increases across supply chains
- Export performance improved modestly, with New Export Orders rising to 46.3% from 40.1%, though remaining well below the expansion threshold
Survey respondents painted a stark picture of business conditions, with tariff policy remaining the dominant concern across industries. Manufacturers reported that volatile trade policies have created planning difficulties, with customers increasingly reluctant to commit to long-term orders.
Link to official ISM Manufacturing PMI (June 2025)
Industry feedback highlighted the widespread impact of trade tensions, with executives describing the current environment as marked by “massive tariff uncertainty” and “erratic trade policy.” Several sectors reported order cancellations or delays, particularly in machinery and transportation equipment, where companies noted that “orders have collapsed” due to policy volatility.
Market Reactions
U.S. Dollar vs. Major Currencies: 5-min
Overlay of USD vs. Major Currencies Chart by TradingView
The Greenback, which had already been edging slowly higher leading up to the ISM manufacturing PMI release, extended its climb when the actual results came in slightly better than expected.
The USD/JPY pair led gains with a 0.42% advance while USD/CAD and USD/CHF posted increases of 0.38% and 0.30% respectively. The USD/GBP pair showed more modest gains at 0.16%, and USD/EUR remained essentially flat with a slight 0.02% decline.
Note, however, that the JOLTS job openings report was also released at the same time and that the numbers beat estimates as well, likely influencing the dollar’s overall reaction. Prior to the release, Fed head Powell’s testimony had a bit of a hawkish tilt since he highlighted the inflationary impact of tariffs and how this discouraged them from easing policy.
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