Industrial Supply Distributors NAICS 423840

Aug 8, 2025 - Manufacturing Contracts Again in July

• US factory activity – a driver of demand for industrial supplies – contracted in July at the fastest pace in nine months, dragged down 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 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 signals contraction.) Manufacturers and their customers have become more cautious amid President Trump's volatile tariff policies. Continued high borrowing costs are also discouraging activity.
• The Trump administration’s on-again, off-again tariff strategy is sending ripples through the industrial sector, significantly impacting production costs, supply chains, and overall competitiveness in the machinery and industrial equipment sector, Manufacturing.Net reports. The implementation of an additional 10% tariff on Chinese imports, suspension of de minimis exemptions for Chinese shipments, and newly announced (and since delayed) 25% tariffs on goods from Mexico and Canada, are causing confusion and requiring manufacturers to quickly adapt to mitigate potential cost spikes and avoid supply disruptions. Manufacturers looking to reshore operations to avoid tariffs and shorten their supply chains are an opportunity for domestic industrial supply distributors. However, rising recessionary fears could cause existing and potential customers to delay or cancel new orders. In March, Goldman Sachs raised the probability of a US recession to 35% from 20%, amid tariff turmoil and economic uncertainty.

• The US manufacturing sector – a driver of demand for industrial supplies – began 2025 on a long-awaited positive note, with economic activity in the sector expanding in January following 26 consecutive months of contraction, according to the latest Manufacturing ISM Report On Business, which surveys US supply executives. “Demand clearly improved, while output expanded and inputs remained accommodative,” the Institute for Supply Management's (ISM) Timothy R. Fiore, chair’s ISM’s Business Survey Committee, said. The Manufacturing PMI registered 50.9% (above 50 indicates expansion) in January, 1.7% higher compared to the seasonally adjusted 49.2% recorded in December. Per ISM’s January report, demand and production improved, and employment expanded. The eight manufacturing industries reporting growth in January (in order) were: Textile Mills; Primary Metals; Petroleum & Coal Products; Chemical Products; Machinery; Transportation Equipment; Plastics & Rubber Products; and Electrical Equipment, Appliances & Components. Eight industries reported contraction including Nonmetallic Mineral Products and Wood Products.
• Producer prices for machinery and supply wholesalers rose 6.8% in June compared to a year ago, after posting a flat previous June-versus-June annual comparison, according to the latest US Bureau of Labor Statistics data. Industry producer prices were at near record highs in June, easing only slightly from their record May, despite a recent decline in sales. Employment by industrial supplies merchant wholesalers shrank 3.5% year over year in May, while the average industry wage rose 8.4% over the same period to $31.39 per hour, just shy of their record high in April, BLS data show.