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

Job cuts at U.S. factories ran near their highest levels since the end of the global financial crisis in 2009 and the Covid-19 pandemic as worries grew over global demand and rising costs, S&P Global reported Tuesday.

Though the firm's manufacturing index ran better than expected for June, it came largely from an inventory rebuild and despite sharp job cuts that were the most since 2009 — excluding the massive labor reductions at the onset of the Covid crisis in 2020.

“While there is better news from the manufacturing sector, we remain concerned as factory growth continues to be temporarily buoyed by inventory building amid supply fears. Supply delays grew more widespread in June,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

Manufacturers have indicated job cuts for three of the past four months as they seek to reduce head count over costs and demand concerns.

“Most worrying was the further fall in employment, notably in the manufacturing sector,” Williamson said. “Factory job cuts are running at the highest since 2009 if the pandemic is excluded, reflecting concerns over the sustainability of the recent upturn in demand alongside worries over the escalating cost of raw materials.”

Despite the worries of manufacturing cuts, the jobs picture has been largely solid this year, with strong gains in four of the five months. Manufacturing employment has risen by 23,000 in 2026, according to the Bureau of Labor Statistics.

Broadly, the S&P manufacturing “flash” reading for its purchase managers index came in at 55.7, up narrowly from May and better than the Dow Jones consensus estimate for 54.8. The reading represents the percentage share of companies reporting growth for the month.

On the services side, the flash PMI was at 51.3, also up slightly on the month and slightly better than the consensus forecast for 51.

Companies have been under pressure this year from an inflation resurgence that has seen energy prices soar and Federal Reserve officials contemplate raising interest rates, or at least eschewing cuts until the situation in the Middle East is settled. Recent headlines about a ceasefire and possible lasting agreement with Iran have triggered a slip in oil which in turn has helped “restore come confidence” among businesses, Williamson said.

However, growth signs are tepid for an economy that accelerated at just a 1.6% annualized pace in the first quarter and a meager 0.5% rate in the fourth quarter of 2025.

“The survey signals that current output levels are consistent with the economy struggling to grow much faster than a 1% annualized rate in the second quarter,” Williamson said.

However, Federal Reserve Chairman Kevin Warsh last week characterized economic growth as “solid” and he attributed the “elevated uncertainty” in part to the Middle East conflicts.