Machine Shops NAICS 332710

Aug 18, 2025 - Manufacturing Contracted Again in July

• US factory activity – a driver of demand for custom machined parts – contracted in July at the fastest pace in nine months, depressed by a faster decline in employment as orders continued to shrink, Bloomberg reports. July marked the fifth consecutive month that factory activity in the US has declined. The Institute for Supply Management’s purchasing managers’ index (PMI) fell to 48 in July from 49 the prior month. The five-month stretch of contraction followed a two-month expansion preceded by 26 months of contraction. The production index rose to 51.4 in July from 50.3 the prior month. New orders rose to 47.1 in July from 46.4, showing slowing contraction. (Readings above 50 signal growth, while below that level indicates contraction.) Manufacturers and their customers have become more cautious amid President Trump's volatile tariff policies, while continued high borrowing costs are also discouraging activity.
• As suppliers to US manufacturers, machine shops benefit from new manufacturing activity created by reshoring and foreign direct investment. Last year, the US manufacturing sector generated 244,000 new jobs as a result of reshoring and FDI activity, according to the Reshoring Initiative’s 2024 Annual Report. The report found that reshoring by US-based businesses exceeded foreign direct investment by the largest margin recorded to date in 2024. The vast majority of new jobs (90%) created by reshoring belong to high- or medium-tech manufacturing sectors, while low-tech industrial jobs remain “under-reshored,” per the report. Industries leading reshoring activity in 2024 were computer and electronics, electrical equipment (including EV batteries and solar), and transportation equipment, with Texas, South Carolina, and Mississippi the top states for reshored operations. Tariffs are rising as motivation for reshoring decisions – up by 454% in 2025 over 2024 – the Reshoring Initiative reports.

• While President Trump promises tariffs will be a boon for American manufacturing, in the short term, at least, tariffs are making life harder for US manufacturers, the National Association of Manufacturers reports. The president of Ohio-based copper wire products maker Republic Wire told the Cincinnati Enquirer that while he understands what the administration is trying to achieve with tariffs, “Higher prices on materials could mean fewer construction projects, which could mean a slowdown for the industry, fewer jobs and a drag on the economy as a whole.” Chuck Daras, president and COO of Michigan automotive manufacturing firm AlphaUSA, wrote in an op-ed “The truth [about tariffs] is that the burden falls squarely on American manufacturers and, ultimately, the American consumer,” adding “If the tariffs remain in place long term, small manufacturers might not be able to hold out long enough to see their promised benefit.”
• Producer prices for machine shops rose 2.9% in June compared to a year ago after rising 0.9% in the previous June-versus-June annual comparison, according to the latest US Bureau of Labor Statistics data. Industry producer prices, which have been rising steadily since mid-2021, reached another all-time high in June. Employment by machine shops shrank 2.1% year over year in May, while average industry wages rose 3.4% over the same period to $27.99 per hour, pennies shy of their record high in December 2024, BLS data show. Machine shops have been raising wages to attract and retain skilled machinists amid the skilled labor shortage in the US manufacturing sector.