US manufacturing PMI beats at 55.7 as economy shows resilience

US manufacturing expanded at the fastest pace in more than a year in June, with the S&P Global flash Manufacturing PMI rising to 55.7, beating the 54.6 consensus and signaling the economy remains on solid footing. The Services PMI climbed to 51.3 from 50.7, also above the 51.1 estimate, while the Composite PMI reached 52.2, its highest level since March.

"The manufacturing sector is showing genuine momentum, with output growth accelerating on stronger new order inflows," said Chris Williamson, chief business economist at S&P Global Market Intelligence. "The data suggests the economy entered the third quarter with solid underlying demand, though the services sector continues to lag behind manufacturing."

The headline Manufacturing PMI of 55.7 compares with 55.1 in May, marking the third consecutive month above the 50 expansion threshold. The new orders sub-index rose to 57.2 from 56.4, while employment in the sector edged up to 52.8 from 52.3, according to S&P Global. The Services PMI at 51.3, while above consensus, remains near the expansion-contraction boundary, pointing to uneven growth across the economy.

The data complicates the Federal Reserve's policy path. A stronger-than-expected manufacturing reading reduces the urgency for rate cuts, with fed funds futures pricing now implying a 48 percent probability of a quarter-point reduction at the September meeting, down from 56 percent before the release. The last time the Manufacturing PMI exceeded 55 was in April 2025, when it hit 56.2, a period that preceded a three-month stretch where the Fed held rates steady at 5.25 percent to 5.5 percent. The 10-year Treasury yield rose four basis points to 4.32 percent following the release, while the Bloomberg Dollar Index gained 0.2 percent. S&P 500 futures pared earlier losses but remained down 0.3 percent as a separate tech-sector selloff weighed on broader equity sentiment.

The resilience in manufacturing, which accounts for roughly 10 percent of US gross domestic product, provides the Fed with cover to maintain its wait-and-see approach even as services activity remains tepid. The central bank's next rate decision is scheduled for July 29, with markets pricing a 72 percent probability of a hold. If manufacturing strength persists into the second half, the case for any 2026 rate cuts weakens further, potentially keeping the dollar elevated and adding pressure on emerging-market currencies and risk assets.

This article is for informational purposes only and does not constitute investment advice.