PNC economists provide insight into key indicators that may have an impact on current business performance and the path ahead.

Institute for Supply Management (ISM) Services Survey 

  • The ISM Services Purchasing Manager’s Index (PMI) rose to 50.8 in June 2025, bouncing back from May’s dip into contractionary territory (49.9)—its first increase in almost a year. New Orders and Business Activity led the month’s charge higher. Employment among service providers, however, fell back into contraction at 47.2 from May’s sojourn above the survey’s breakeven level in May (50.7). Price pressures faced by the U.S. economy’s service sector remain elevated, with June 2025’s Prices component index falling only modestly to 67.5.
  • The ISM Services PMI report’s New Orders component index posted a sharp turnaround in June 2025, rising back into expansionary territory at 51.3 for the month. This component of the topline survey dipped below breakeven levels in May (46.4) for the first time since June 2024. Averaging through the volatility in New Orders results of recent months, New Orders among service industry businesses is at 50.0 for the past three months. Survey respondents highlighted comments skews somewhat positive in the June report, with suggestions that “business is starting to increase,” or “business seems to be picking up,” but uncertainty regarding broader macroeconomic influences, including housing affordability, remains a concern.
  • Service providers’ cost pressures cooled slightly in June 2025. The Prices component of the ISM Services PMI report fell to 67.5 for the month, down from 68.7 in May. This result comes ahead of July’s planned reinstitution of the heaviest of the tariffs applied to imports into the U.S. The July 9 deadline for the move is expected to reignite cost increases for U.S. businesses and, eventually, feed higher consumer price inflation.

Institute for Supply Management (ISM) Manufacturing Survey

  • The ISM Manufacturing PMI rose to 49.0 for June 2025, its first monthly increase since January. The topline index has been in contractionary territory since February of this year after a healthy rise through the second half of 2024. Forward-looking indicators in the ISM Manufacturing survey’s sub-indices continued to lead weakness in June 2025, with New Orders and Employment both slipping on the month. The strongest monthly gain among the ISM Manufacturing PMI’s components was the Imports sub-index, which jumped from a post-Financial Crisis low in May (39.9) to 47.4 in June.
  • The ISM Manufacturing PMI diffusion index indicates the net percentage of manufacturers who are experiencing expanding or contracting activity across various categories, with a reading below 50 revealing net contraction across the manufacturing sector. June 2025’s topline reading of 49.0 represents the fourth consecutive monthly contraction after two months above the expansionary threshold to open this year.
  • June 2025’s Commodity Prices reading of 69.7 reveals that price pressures remain high on manufacturers, despite ongoing changes to tariff policy application and before the July 9 re-implementation of the Reciprocal Tariffs policy in force. Higher costs for manufacturers, as demonstrated by the now five-month running trend through the June 2025 ISM Manufacturing PMI’s Commodity Prices sub-index, suggest that renewed upstream price pressure will be pushing consumer prices higher through the second half of 2025.

Employment 

  • U.S. job growth surprised to the upside in June, with an increase in employment of 147,000, based on a survey of employers by the Bureau of Labor Statistics. Expectations were for job growth of 110,000. There were modest upward revisions to job growth in April (to 158,000 from 147,000) and May (to 144,000 from 139,000) of a combined 16,000. Over the past three months, job growth has averaged a solid 149,000. Although this is down from average monthly job gains of above 200,000 in 2023 and around 170,000 in 2024, the labor market remains in solid shape.
  • The unemployment rate fell slightly to 4.1% in June from 4.2% in March through May. The unemployment rate has been between 4.0% and 4.2% since May 2024, after increasing from a cyclical low of 3.4% in 2023. Although the unemployment rate is higher than it was a couple of years ago, it remains historically low and is consistent with what the Federal Reserve views as its mandate of “maximum employment.”
  • The labor force (the number of people working or looking for work) contracted by 130,000 in June from May. The labor force participation rate, which is the share of adults working or looking for work, fell to 62.3% in June from 62.4% in May and 62.6% in April. This is the first time the labor force participation rate has been this low since late 2022, when the economy was recovering from the pandemic. The labor force participation rate had been between 62.4% and 62.8% through all of 2023 and 2024 and the first five months of 2025.
  • PNC expects job growth to weaken further in the near term. Demand for labor is softening as tariffs and the uncertainty they are creating have led businesses to turn more cautious. PNC’s forecast is for the unemployment rate to climb gradually to around 4.5% by early 2026.

Sources

Economic Update – ISM Services Index Increased to 50.8 in June 2025

Economic Update – ISM Manufacturing Survey Increased to 49.0 in June 2025

Economic Update – Job Growth Surprises to the Upside in June, Unemployment Rate Down

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PNC economists provide analyses and forecasts of national, regional, and global economic and financial trends. For more economic data and reports, visit www.pnc.com/economicrelease.