July 2025 Manufacturing Business Outlook Survey

Note: Survey responses were collected from July 7 to July 14.

Manufacturing activity in the region expanded overall this month, according to the firms responding to the July Manufacturing Business Outlook Survey. The survey’s indicator for general activity returned to positive territory, and the indexes for new orders and shipments both increased this month. All three indexes recorded their highest readings since February. The employment index turned positive, suggesting overall increases in employment. Both price indexes rose after declining last month and continue to suggest overall price increases. The future activity indicators suggest that the firms continue to expect growth over the next six months.

Current Indicators Improve

The diffusion index for current general activity rose 20 points to 15.9 in July, its first positive reading after three negative readings and its highest reading since February (see Chart 1). Nearly 32 percent of the firms reported increases in general activity this month (up from 25 percent last month), while 16 percent reported decreases (down from 28 percent); 49 percent reported no change (up from 44 percent). The index for new orders increased 16 points to 18.4 this month, and the current shipments index increased from 8.3 to 23.7, also their highest readings since February.

The firms reported overall increases in employment, as the employment index rose 20 points to 10.3 and mostly recovered its decline from last month. Most firms (70 percent) reported no change in employment, 17 percent reported increases, and 7 percent reported decreases. The average workweek index inched up to 0.4.

Firms Continue to Report Overall Price Increases

The prices paid index rose 17 points from 41.4 to 58.8, largely undoing its fall in June (see Chart 2). Almost 61 percent of the firms reported increases in input prices, while 2 percent reported decreases; 31 percent reported no change. The current prices received index increased 5 points to 34.8. Almost 35 percent of the firms reported increases in the prices of their own goods, none reported decreases, and 58 percent reported no change.

Firms Continue to Expect Increases in Wages

In this month’s special questions, the firms were asked about changes in wage rates and compensation packages over the past three months, as well as their updated expectations for changes in various input and labor costs for the current year. Thirty percent of the firms indicated wages and compensation costs had increased over the past three months, 70 percent reported no change, and no firm reported decreases. Sixty-nine percent of the firms reported not having made changes to their 2025 plan for wages and compensation since the beginning of the year, 28 percent indicated they plan to increase wages and compensation, and 3 percent indicated they plan to decrease wages and compensation.

The firms expect cost increases across all categories of expenses in 2025. The responses indicate a median expected increase of 3 to 4 percent for wages, unchanged from April. The firms also reported a median expected increase of 4 to 5 percent for health benefits, up from 3 to 4 percent when this question was last asked in April, and an increase of 3 to 4 percent for total compensation (wages plus benefits), down from 4 to 5 percent in April.

Future Indicators Remain Positive

The diffusion index for future general activity ticked up 3 point to 21.5 in July, after declining 29 points in June (see Chart 1). Nearly 41 percent of the firms expect an increase in activity over the next six months, exceeding the 20 percent that expect a decrease; 30 percent expect no change. The future new orders index increased 8 points to 30.0, and the future shipments index decreased 4 points to 23.6. The firms still expect overall increases in employment over the next six months, but the future employment index ticked down 5 points to 20.1. Almost 26 percent of the firms expect increases, while 6 percent expect decreases in future employment; more than 67 percent of the firms expect no change. The index for future capital expenditures increased 3 points to 17.1. Almost 73 percent of the firms expect no change in capital spending.

Summary

Responses to the July Manufacturing Business Outlook Survey suggested an overall increase in regional manufacturing activity this month. The indicator for current activity turned positive after three consecutive negative readings, and the new orders and shipments indexes both increased. The firms indicated overall increases in employment, and the current price indexes remained elevated. The survey’s broad indicators for future activity remained positive, suggesting expectations for growth over the next six months.

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