US manufacturing hits 4-year high, with AI buildout a major driver of growth, though price volatility looms: survey

Manufacturing activity in July hit a four-year high, with massive AI infrastructure investment a major driver of growth — even as industry leaders sounded the alarm over price volatility, according to a survey released Monday.The Institute for Supply Management’s July manufacturing gauge jumped to 55.6 – expanding at its fastest pace since May 2022 and marking its seventh consecutive month of growth, the survey said.Any reading above 50 in the ISM’s monthly survey indicates growth while any measure below 50 signals contraction.Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said increased certainty around President Trump’s tariff policy and hopes for a more permanent deal to end the war in Iran helped encourage the boost in manufacturing.“My gut is, it’s not just a one- or two-month trend,” Spence told reporters.“Companies are seeing six or more months of these solid demand factors going in the right direction.”The survey’s gauge for production jumped to 58.5, its highest level since the end of 2021; the employment measure hit 52.8, rising for the first time in nearly three years; and new orders growth, which signals demand, also increased.Massive business investments in AI infrastructure helped drive the expansion, along with political pressure to ramp up US manufacturing, according to experts.Despite the growth in manufacturing, individuals’ responses to the ISM survey were overwhelmingly negative, with many industry leaders calling out price shocks from the Iran war and the chances that the Fed could raise interest rates next month to counter inflation fears.“Pricing volatility was mentioned in 57% of negative comments, the Iran war 43%, increasing lead times 22% and tariffs 18%,” Spence said.Among the survey responses, one metals producer remarked that “it makes me yearn for the coronavirus pandemic chaos, which was more manageable than whatever this is that we are in.”Some transportation equipment manufac...