# US manufacturing hits 4-year high, with AI buildout a major driver of growth, though price volatility looms: survey > Source: > Published: 2026-08-03 20:50:22+00:00 # US manufacturing hits 4-year high, with AI buildout a major driver of growth, though price volatility looms: survey See more of our coverage in your search results. [Add The New York Post on Google](https://www.google.com/preferences/source?q=nypost.com) Manufacturing activity in July hit a four-year high, with massive AI infrastructure investment a major driver of growth — even as industry leaders sounded the alarm over price volatility, according to a survey released Monday. The Institute for Supply Management’s July manufacturing gauge jumped to 55.6 – expanding at its fastest pace since May 2022 and marking its seventh consecutive month of growth, the survey said. Any reading above 50 in the ISM’s monthly survey indicates growth while any measure below 50 signals contraction. Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said increased certainty around President Trump’s tariff policy and hopes for a more permanent deal to [end the war in Iran](https://nypost.com/2026/08/02/world-news/trump-announces-when-new-iran-talks-to-begin-after-calling-off-massive-weekend-attack/) helped encourage the boost in manufacturing. “My gut is, it’s not just a one- or two-month trend,” Spence told reporters. “Companies are seeing six or more months of these solid demand factors going in the right direction.” The survey’s gauge for production jumped to 58.5, its highest level since the end of 2021; the employment measure hit 52.8, rising for the first time in nearly three years; and new orders growth, which signals demand, also increased. Massive business investments in AI infrastructure helped drive the expansion, along with political pressure to ramp up US manufacturing, according to experts. Despite the growth in manufacturing, individuals’ responses to the ISM survey were overwhelmingly negative, with many industry leaders calling out price shocks from the Iran war and the chances that the [Fed could raise interest rates](https://nypost.com/2026/07/29/business/fed-holds-interest-rates-steady-as-dissent-mounts-over-whether-to-hike-rates-soon/) next month to counter inflation fears. “Pricing volatility was mentioned in 57% of negative comments, the Iran war 43%, increasing lead times 22% and tariffs 18%,” Spence said. Among the survey responses, one metals producer remarked that “it makes me yearn for the coronavirus pandemic chaos, which was more manageable than whatever this is that we are in.” Some transportation equipment manufacturers lamented increased costs and transit time “for rerouted shipments due to conflicts in the Red Sea, Strait of Hormuz and Suez Canal.” Others noted that a spike in demand for certain electronics supplies due to the AI race was “challenging on-time fulfillment for our supply chains.” Jackson Barnes, CEO of Novo, a financial platform for small businesses, said the build-out of massive AI data centers is largely driving manufacturing investments – but that has a lopsided impact on the industry. “Look at where the demand is coming from. It’s coming from semiconductors, AI infrastructure and defense. Those are capital-intensive supply chains dominated by large manufacturers,” Barnes told The Post. “That gap shows up clearly in what we see. Across the small manufacturers we work with, the median firm’s quarterly revenue is down roughly 12% from two years ago, even though total volume across that same group is up about 14%.” Tech giants like [Meta and Microsoft](https://nypost.com/2026/07/30/business/metas-record-losing-streak-continues-while-microsoft-chip-stocks-jump-on-ai-earnings/) have announced planned capital expenditures this year of as much as $145 billion and $190 billion, respectively, as they ramp up their AI efforts. Rising oil prices amid the Iran war have multiplied costs for nearly every manufacturer – and the concern for many in the industry is that the Federal Reserve could soon raise interest rates as a result, which could hit their growth streak. Overall, it was a strong report, according to experts, as all but one manufacturing industry reported growth in July — including electrical equipment, appliances and components and computer and electronic products. Chemical products marked the only sector that contracted over the month. “I would say that a lot of the tech investment right now has a lag,” said Amrita Bhasin, co-founder and CEO of Sotira and a manufacturing expert. “There is a lot of money being poured into AI infrastructure and that infrastructure is very resource-intensive.” “I am optimistic just because we’ve got a lot of factors that are all coinciding at the right time,” Bhasin told The Post.