US manufacturing activity contracted again last month amid subdued hiring and pervasive upward pressure on input prices.

I could leave it there. That’s pretty much all you need to know about the first of this week’s top-tier US macro data. But I’ll elaborate.

The ISM manufacturing headline for June, at 49, actually counted as a slight beat, but it nevertheless marked a fourth consecutive month under the 50 demarcation line separating expansion from contraction.

Do note: The marquee gauge of factory activity in America has managed just three readings above 50 in 32 months.

At the risk of coming across as unduly abrasive, it ain’t comin’ back, folks. I don’t care how many populist demagogues America elects, and I don’t care whether they’re right-wing fascists or left-wing ideologues. The US is a services-based economy. Pretending otherwise isn’t going to change anything.

Would it be nice if America could rebuild its manufacturing base? Sure. Particularly in areas where a lack of domestic capacity could jeopardize national security. But it’s not going to happen, and certainly not overnight.

For whatever it’s worth (nothing to traders on ISM days), the S&P Global factory PMI for the US printed 52.9 in the final reading for June, the highest since May of 2022. That gauge has now recorded six readings above 50 in a row.

Rightly or wrongly, market participants discount the S&P Global releases when they diverge from the ISM surveys. In Tuesday’s readouts, an S&P Global gauge of payrolls indicated the fastest rate of hiring since September 2022. By contrast, the employment gauge in the ISM report registered 45, marking yet another overtly unfortunate read on factory-floor hiring trends.

As the figure above shows, the ISM prices gauge remained very elevated, at 69.7.

The two surveys at least agree that price pressures are prevalent. “Factories report[ed] steep cost increases again in June linked to tariffs, which they are passing through to customers,” S&P Global’s Chris Williamson remarked. “The big question, of course,  is whether this merely results in a short-term change in the price level rather than a more worrying return of stubborn inflation.”

Taken together, I suppose you could call these releases a “mixed” read on US manufacturing. But if you ask me, the sub-50 ISM headline combined with another poor read on new orders (46.4) and the stagflationary juxtaposition between contracting ISM employment and the highest readings on the prices index since 2022, together paint a discouraging picture.