Price growth moderated but have input prices have rapidly increased for 21 months.ISM table and related comments by permission of the Institute for Supply Management (ISM)Please consider the June 2026 ISM® Manufacturing PMI® ReportThe report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.“The Manufacturing PMI® registered 53.3 percent in June, 0.7 percentage point lower than in May. The overall economy continued in expansion for the 20th month in a row. (A Manufacturing PMI® above 47.5 percent, over a period of time, generally indicates an expansion of the overall economy.)The New Orders Index expanded for the sixth consecutive month after four straight readings in contraction, registering 56 percent, down 0.8 percentage point compared to May’s figure of 56.8 percent. The June reading of the Production Index (52.2 percent) is 2.1 percentage points lower than May’s reading of 54.3 percent.The Prices Index remained in expansion (or ‘increasing’ territory), registering 73 percent, a 9.1-percentage point decrease from May’s reading of 82.1 percent. The Backlog of Orders Index registered 50.5 percent, down 1.7 percentage points compared to the 52.2 percent recorded in May. The Employment Index registered 49.7 percent, up 1.1 percentage points from May’s figure of 48.6 percent,” says Spence.Key ISM PointsNew Orders Growing – 6 monthsProduction Growing – 8 monthsEmployment Contracting – 33 monthsSupplier Deliveries Slowing – 7 monthsCustomers’ Inventories Too Low – 21 monthsPrices Paid Increasing – 21 monthsImports Growing – 5 monthsNew Export Orders – Contracting – 1 monthThat’s a mixed bag, spinnable however you like.Given production is positive, it’s not stagflation although employment and prices tilt that way.A fair description is weak growth with employment pressures and bigger inflation pressures.Respondent Comments (Emphasis Mine)“The conflict in Iran has impacted pricing in every category of raw materials. Especially, items that have a heavy concentration of oil in the components like our adhesives.” [Chemical Products]“Continued pressure from conflict in Middle East is resulting in a more conservative approach to capital expenditures. We are seeing an increase in consumables and services purchasing from sectors like chemical analysis, per- and polyfluoroalkyl substances (PFAS), and environmental and pharmaceutical testing.” [Computer & Electronic Products]“General purchasing operations are being shaped by (1) moderating but still elevated inflation, (2) higher interest rates and (3) continued policy uncertainty, particularly around tariffs and global trade. While overall economic growth remains resilient, it is slowing as consumer spending weakens under pressure from higher costs for energy and essential goods, reducing demand visibility and increasing cost sensitivity for buyers. Meanwhile, supply chains have stabilized compared to prior years but remain structurally complex, with trade policy volatility, geopolitical tensions and regulatory changes now ongoing cost drivers rather than temporary disruptions. Our organization continues balancing cost control with resilience, shifting sourcing strategies, tightening inventories and prioritizing supplier diversification and risk management.” [Computer & Electronic Products]“Retail electronics sales seem to have stabilized to some extent. The pause in tariff changes has been welcomed the last two months, but it’s only a matter of time before more confusion is introduced.” [Electrical Equipment, Appliances & Components]“Input costs remain elevated across key categories, driven largely by Middle East conflict impacts and ongoing tariff uncertainty. Supplier lead times have stretched, which is influencing our inventory strategy and sourcing decisions. We are managing exposure through diversified supplier bases and contract structures that balance cost certainty with operational flexibility.” [Food, Beverage & Tobacco Products]“Conditions are optimistic but not yet booming for our company, even though many others, it seems, are experiencing growth. Machinery in support of defense and semiconductor manufacturing is very strong, a bright spot for our team. Industrial and medical clients are slow to purchase, focusing more on refurbished and upgraded units versus new ones.” [Machinery]“Core business remains solid in the face of ongoing geopolitical uncertainty. Cautiously optimistic that a deal will be reached to reopen the Strait of Hormuz; concerned about ongoing ripple effects even when the strait reopens but situation is highly concerning if the strait remains closed. AI industry continues to have huge capacity consumption for critical electronics. Monitoring impact of U.S. defense industry needs on supplier capacity.” [Miscellaneous Manufacturing]“No major changes from last month. With the potential ending of the Iran war, management is expecting us to go back to February pricing structures and plans since the increase in oil prices was driven by the war and not regular market influences.” [Petroleum & Coal Products]“Requests from suppliers in Europe and India for ‘energy surcharges’ have stopped this past month. We’re seeing continued capacity growth in the Asia-Pacific region (excluding China), including Vietnam, Thailand and South Korea. Most suppliers are building for the longer term as geopolitical protection from all sides.” [Transportation Equipment]“The new Section 232 tariffs continue to destroy our profitability and demand as we have to raise prices to deal with this gigantic tax. Add the ‘incentives’ for our company to pivot to purchasing non-U.S. sourced material, and one realizes the total ineptitude of this tariff policy.” [Transportation Equipment]Total Tariff IneptitudeTotal ineptitude is an accurate comment. Not only does Trump’s ineptitude increase prices, it a big job killer to small businesses.I have been warning about Trump’s tariffs. The consensus is tariffs are one-time and they have finally played out.My view has been that Trump will act over the long haul to make tariffs worse, every way he can, and it’s not one time. It’s an ongoing mess despite the Supreme Court reversing his basic tariffs.ISM Reported Input PricesPrices PaidFebruary: 45.4% Higher, 4.4% LowerMarch: 59.4% Higher, 2.8% LowerApril: 70.3% Higher, 1.2% LowerMay, 66.3% Higher, 2.2% LowerJune, 55.1% Higher, 9.2% LowerPrices were accelerating higher even before the war in Iran.ISM Reported EmploymentEmployment is best reported as stagnant. There is little hiring or firing.ISM Reported New Export OrdersNew export orders are anemic.Trump’s policies increase import prices, especially steel, aluminum, and parts. The result is higher US costs that manufacturers pass on.It is very difficult to increase export orders when US input prices are rising faster than import prices in the rest of the world.The end result of this ineptitude is higher prices for US and foreign customers, and fewer exports than we would have without these massive distortions.Two Key TakeawaysIf Trump wants to increase exports, hiking tariffs and increasing costs on US manufacturers is a ridiculous way of going about things.Tariff policy is harming US manufacturing employment too, especially small businesses less able to pass on price increases.Meanwhile, trump is beating around the bush unable to see his own damage, yet reducing tariffs on farm machinery and fertilizer to help farmers.If Trump wants to help farmers (and everyone else), he will scrap his tariff policy totally.But he won’t. Trump is married to economically illiterate policies (foreign and domestic) and it will crush Republicans in the midterm elections.Fed rate hikes are now priced in to counter the inflation of this madness.Original Post