Metal Coating, Engraving & Heat Treating NAICS 3328

Aug 21, 2025 - US Manufacturing Contracts Again in July

• US factory activity 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. New orders for manufactured durable goods – an indicator of future demand for metal coating, engraving and heat treating services – decreased 9.3% month over month in June, following a 16.5% increase in May and 6.6% decline in April, according to the Census Bureau. New orders for transportation equipment, down 22.4% MoM in June, drove the decline. July marked the fifth consecutive month of declining US factory activity. The Institute for Supply Management’s purchasing managers’ index (PMI) – considered a key indicator of the state of the US economy – fell to 48 in July from 49 in June. The five-month stretch of contraction followed a two-month expansion preceded by 26 months of contraction.
• Tariffs are raising the cost of raw materials, including steel, zinc, nickel, and other coating and plating materials, used by the metal finishing industry and threaten to disrupt supply chains and the industry’s customers. In June, the Trump administration imposed 50% tariffs on steel and aluminum imports to the US making those metals more expensive and harder to come by. Trump’s “Liberation Day” announcement of reciprocal tariffs on a wide range of imports – including vehicles, auto parts, and appliances – in April (since delayed for 90 days), would have a significant impact on metal finishers' suppliers and customers as well. More broadly, the tariffs threaten to slow economic growth – reducing demand for metal finishing services – and could even drive the US economy into recession. In early April, J.P. Morgan Research raised the probability of a recession occurring in 2025 to 60% — up from 40%.

• While white and neutral colors continue to reign as the most popular choices for vehicles in North America this year, industry insiders expect consumers to gravitate toward bolder colors in years ahead. “We have been predicting that consumers will be ready now and in the next decade for color… and move away from all gray and beige,” said Misty Yeomans, manager of color styling at PPG. Automakers have already responded with Neoteric Yellow (Hyundai) and Molten Magenta (Ford). According to Kelley Blue Book’s 2025 color forecast vivid blue is increasingly popular because it stands out on the road and works well with a variety of car models. Blue’s growth in popularity is a reflection of shifting customer preferences, especially among younger drivers. Meanwhile, per BASF’s 2024-2025 Automotive Color Trends report, white represents 34% of car purchases, followed by black (22%), silver (14%), gray (10%), blue (9%), and red (8%).
• Producer prices for metal coating, engraving, and heat treating firms rose 5.4% in July compared to a year ago, after rising 4.2% in the previous July-versus-July annual comparison, according to the latest US Bureau of Labor Statistics data. Industry producer prices have been rising steadily since early 2021 as demand for finished metal goods increased as the US economy reopened following the pandemic. Employment by the industry remained flat in June and is stuck below pre-pandemic levels. Meanwhile, average wages at coating, engraving, heat treating, and allied activities rose 2.8% in June to $24.26 per hour, BLS data show.