July’s PMI and ISM reports show incredible strength in manufacturing, with new orders up and customer inventories low. This data points directly to increased freight demand and a robust peak season ahead. Dive into the numbers and what they mean for the logistics industry.
July’s Purchasing Managers’ Index climbed to 55.6 — up 2.3% from June and the highest reading since May 2022 — while the ISM manufacturing index came in at 58.9, reinforcing signs of broad-based industrial expansion that could translate into stronger freight volumes through the remainder of the year, according to a FreightWaves SONAR update released Tuesday, August 4.
The figures matter to carriers, brokers, and shippers because they signal that manufacturers are running lean on inventory and will need to replenish — a dynamic that historically drives truckload and intermodal demand. Customer inventories in the ISM report registered 40.7, down 1.6% from the prior period, a level respondents characterized as too low.
Other ISM sub-indices reinforced the bullish read: production jumped to 58.5 in July, a 6.3% month-over-month increase, while backlogs rose 4.5% and manufacturing employment gained 3.1%. The PMI report also showed new orders increasing and manufacturing employment turning positive, set against a broader U.S. GDP growth backdrop of 2.8%.
“Orders are up. There is a need for replenishment in inventories. Backlogs are up. Everything is pointing to strength in these numbers and continued expansion in July, showing that we should be seeing some increased demand.”
On the labor side, 60% of ISM survey respondents said their companies are actively hiring, while the remainder said they are managing headcounts — a split that suggests manufacturers are cautiously optimistic rather than pulling back.
The SONAR analyst noted that capacity has not meaningfully re-entered the market, with tight supply stemming largely from regulatory pressure. That combination of rising demand signals and constrained capacity could accelerate rate movement if freight volumes follow manufacturing trends into the traditional fall peak. The analyst flagged the end of August as a potential inflection point to watch.
Separately, FreightWaves SONAR announced a new data partnership with Retlia to launch rtleg.usa, dubbed the Register, an index designed to give users a macroeconomic view of U.S. retail conditions. The index is now available in the SONAR platform.
- July PMI rose to 55.6, up 2.3% from June and the strongest reading since May 2022, while ISM came in at 58.9.
- ISM customer inventories fell to 40.7, down 1.6%, signaling a restocking cycle that could lift freight demand through peak season.
- SONAR launched a new retail macroeconomic index, rtleg.usa, developed in partnership with Retlia.
Speaker 1 [0:07] Today’s sonar update. I’m going to focus on two things. Today is Tuesday, August fourth. One, an exciting new sonar development. We have partnered with Retlia to produce a new index, rtleg.usa. It’s called the Register, and it gives a view of macroeconomic. Retail conditions. So very cool. Check it out in the Sonar UI. The second thing I really want to focus on and talk about is the new PMI numbers and ISM numbers that were released yesterday for July. So the PMI for July is 55.6, which is up 2.3% above June and a record since May 2022. Overall, For the PMI, new orders increased, inventories remained too low based on sentiment, manufacturing employment turned positive. And all of this is really signaling economic growth on the backdrop of GDP growth at 2.8%. The ISM number came in at 58.9, customer inventories at 40.7, which is down 1.6%, showing they’re going to need to replenish and restock those inventories. Overall employment was up 3.1% in manufacturing. Production increased to 58.5 in July, which is 6.3% up. Backlogs are up by 4.5%. And of those surveyed, 60% said that their companies are hiring, while the remainder said they are managing headcounts. But overall, Orders are up. There is a need for replenishment in inventories. Backlogs are up. Everything is pointing to strength in these numbers and continued expansion in July, showing that we should be seeing some increased demand. You know, we’re not seeing capacity enter the market. This market has been really driven based on lack of capacity due to regulatory pressure. And this is signaling continued strength in manufacturing in our industrial economy. Which should continue to generate freight. Obviously, commodities coming in, finished goods going out, heading to DCs, and then eventually to retailers or to the consumer or the ultimate purchaser. So all of that should be generating freight and looking towards continued strengthening that we have been talking about and potential increased demand coming in the end of August and then through a normal peak season in the fall. So we’ll continue to watch it. But overall, all of the PMI and ISM numbers really came in incredibly strong. So excited to keep watching that. There’s a great article in FreightWaves on FreightWaves website that was released today, really detailing the outcome of this month’s report. So I encourage you to check it out.
Speaker 2 [3:01] All right. So a reminder that the Sonar update today is brought to you by RXO CapacityNow. So as we Hopefully see that continued increase in freight demand as we go through the rest of the year and into peak season. If your routing guide breaks down, if you need capacity now, be sure to reach out to RXO.
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