US Manufacturing Slows Amid Tariff Inflation, Richmond Fed Shows Modest Regional Recovery

US manufacturing activity showed mixed signals in June 2025, with national data indicating continued expansion but at a slower pace, dampened by falling exports and tariff-driven inflation. The US manufacturing PMI was 52.8, reflecting strong domestic demand but rising input and output costs at their fastest rate since mid-2022, largely attributed to tariffs, which pushed inflation higher. Employment in manufacturing increased sharply as firms worked to meet growing workloads, although business confidence declined slightly amid trade policy uncertainty. Meanwhile, the Richmond Fed's Manufacturing Index for the Fifth District, which includes parts of the mid-Atlantic region, remained in negative territory at -7 but improved from the previous month’s -9, signaling soft but stabilizing regional manufacturing conditions. Shipments and new orders in the Fifth District showed modest gains, and expectations for future shipments and price growth were mixed, while employment edged lower and local business conditions stayed negative. The regional data suggest cautious optimism amid ongoing challenges, consistent with broader national trends of inflationary pressures and uneven growth in the manufacturing sector.