Factory job cuts in June neared financial crisis and Covid levels, S&P says

Job cuts at U.S. factories have reached levels not seen since the end of the global financial crisis in 2009 and the Covid-19 pandemic, according to a report by S&P Global. Despite better-than-expected manufacturing index data for June, the increase was largely driven by inventory rebuilding, overshadowed by significant job cuts that haven’t been seen since 2009, excluding those at the start of the Covid crisis in 2020.

Chief Business Economist at S&P Global Market Intelligence, Chris Williamson, expressed concerns about the temporary boost in factory growth due to inventory building amidst supply chain disruptions. The report highlighted a worrying trend of job cuts in the manufacturing sector, driven by concerns over demand sustainability and rising raw material costs.

Although the manufacturing industry has seen job cuts for three out of the past four months, overall job market conditions have been solid this year. Manufacturing employment has seen a rise of 23,000 in 2026, according to the Bureau of Labor Statistics.

The S&P manufacturing “flash” reading for its purchase managers index showed a slight increase to 55.7 in June, surpassing the Dow Jones consensus estimate. On the services side, the flash PMI also showed a slight improvement to 51.3, slightly better than forecasted.

Businesses have faced challenges this year due to a resurgence in inflation, particularly in energy prices. Federal Reserve officials have been considering raising interest rates to combat inflation. Recent developments in the Middle East, including a ceasefire and potential agreement with Iran, have led to a decrease in oil prices, boosting business confidence.

Despite these developments, the economy has shown tepid growth, with a sluggish 1.6% annualized pace in the first quarter and a meager 0.5% rate in the fourth quarter of 2025. The survey indicates that current output levels suggest the economy may struggle to grow beyond a 1% annualized rate in the second quarter.

Federal Reserve Chairman Kevin Warsh described economic growth as “solid,” attributing the elevated uncertainty to ongoing conflicts in the Middle East. Overall, the economic landscape remains uncertain, with businesses navigating challenges related to supply chain disruptions, rising costs, and global demand fluctuations.