American manufacturers cut jobs in June at the fastest pace since 2009 — outside the early-pandemic collapse of 2020 — even as their factories produced goods at the strongest rate in years.

The contradiction emerged from a survey released Tuesday by S&P Global, whose flash U.S. Manufacturing Index climbed to 55.7 for June, up from May and above the 54.8 consensus estimate, even as job cuts ran near their highest level since 2009 excluding the pandemic collapse.

“Most worrying was the further fall in employment, notably in the manufacturing sector,” said Chris Williamson, chief business economist at S&P Global Market Intelligence, adding that “factory job cuts are running at the highest since 2009 if the pandemic is excluded.”

How can production rise while payrolls shrink?

Much of June’s strength came not from rising demand but from stockpiling. Manufacturers built inventories at a pace approaching the survey’s all-time high — surpassed only by the 2025 tariff-driven inventory surge — as companies rushed to protect themselves from supply-chain disruptions and cost spikes tied to the Middle East conflict.

Factories were busy filling warehouses, not necessarily responding to stronger customer demand, while continuing to reduce staffing to control costs.

The squeeze comes from prices.

Input costs remain historically elevated, with manufacturers citing higher steel and aluminum prices, tariffs, and petroleum-related inflation linked to the conflict. Facing those pressures and an uncertain demand outlook, many companies chose to trim headcount rather than expand payrolls.

Williamson said the data point to an economy “struggling to grow much faster than a 1% annualized rate” in the second quarter — sluggish by recent standards.

The weakness is not confined to factories.

The services sector expanded only modestly, posting a flash reading of 51.3, with the survey citing customer resistance to higher prices and continued weakness in consumer confidence.

Meanwhile, the broader labor market has shown additional warning signs. Lucid Motors announced its second major layoff of the year on Monday, cutting approximately 1,500 workers, or about 18% of its workforce, as demand in the electric-vehicle sector cools.

Outplacement firm Challenger, Gray & Christmas reported more than 97,000 announced U.S. job cuts in May alone.

It is important to keep perspective. According to official Bureau of Labor Statistics data, manufacturing employment has actually increased by approximately 23,000 jobs in 2026, with strong gains in four of the year’s first five months.

The S&P survey measures hiring direction among roughly 800 surveyed companies rather than precise employment totals, and one month does not establish a trend. Some of the decline also reflects automation, with manufacturing-technology hiring increasing modestly over the past year.

Still, June’s reading represents a sharp reversal at an awkward moment.

Companies remain caught between stubborn inflation — with energy costs elevated by the war — and a Federal Reserve under Chair Kevin Warsh that is weighing potential rate increases or, at minimum, delaying rate cuts until geopolitical conditions stabilize.

Higher borrowing costs would make expansion and hiring even more expensive for manufacturers.

For workers, the message is unsettling.

Factory jobs have long provided a pathway to middle-class wages without requiring a college degree. When manufacturers stop adding shifts or begin trimming staff, the effects ripple through entire communities. Local restaurants, suppliers, trucking companies, and retailers often feel the impact as well.

The one bright spot was confidence.

Williamson noted that “brighter news out of the Middle East has helped restore some confidence among US businesses in June.”

If that stability holds and energy prices continue easing, some of the pressures driving job cuts could fade.

For now, however, June’s report delivers a clear warning: a factory sector that looks strong on the surface while quietly shedding the workers who keep it running.

JBizNews Desk | New York

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