July’s manufacturing sector posted its strongest expansion in four years, and less-than-truckload (LTL) carriers are already seeing the freight flow. According to FreightWaves, the Institute for Supply Management’s Manufacturing PMI hit 55.6 in July — its highest reading since May 2022 — and four publicly traded LTL carriers reported preliminary July tonnage growth of 5.1% year over year, with XPO and ArcBest outperforming seasonal norms by 400 and 360 basis points.
PMI surge signals industrial demand
FreightWaves reported that the PMI reading came in 2.3 percentage points above June and 1.6 points ahead of analysts’ expectations, consistent with real GDP growth of 2.8%. July marked the seventh straight month of expansion for the dataset, with new orders climbing for a seventh consecutive month to 56.7 — 70 basis points higher than June. Demand sentiment improved to a 3.5-to-1 positive-to-negative comments ratio, up from 2.7-to-1 in June.
Manufacturing employment turned positive for the first time in 33 months, with the employment subindex at 52.8, up 3.1 points. The production subindex rose 6.3 points to 58.5, and the backlog subindex increased 4.5 points to 55. Sixty percent of survey respondents said their companies are hiring, while the remainder are “managing head counts,” according to the report.
| PMI subindex | July reading | Change vs June |
|---|---|---|
| Manufacturing PMI | 55.6 | +2.3 pts |
| New orders | 56.7 | +70 bps |
| Production | 58.5 | +6.3 pts |
| Employment | 52.8 | +3.1 pts |
| Backlog | 55.0 | +4.5 pts |
| Supplier deliveries | 58.9 | +1.5 pts |
| Customers’ inventories | 40.7 | −1.6 pts |
A PMI reading above 50 signals expansion, while a sustained level above 47.5 indicates the overall economy is growing. Customers’ inventories remained “too low” at 40.7 — down 1.6 points sequentially — according to the survey.
LTL carriers see tonnage inflection
Roughly two-thirds of LTL volumes are tied to industrial output, and inflections in ISM data usually lead LTL tonnage by a few months, according to FreightWaves. That link is showing up in carrier results: four publicly traded LTL carriers — ArcBest, XPO, Old Dominion Freight Line, and Saia — reported second-quarter results last week, with average tonnage up 2.6% year over year in the period.
July preliminary results were stronger, with tonnage growth of 5.1% y/y. Weight per shipment was 3% higher y/y on average in Q2, as more truckload shipments move back to LTL networks and the freight mix skews more industrial, FreightWaves reported.
Management commentary turned more upbeat. ArcBest normally sees a 4.6% tonnage decline from June to July, but tonnage was off just 1% this year — 360 basis points of outperformance. XPO reported 400 bps of outperformance, and Old Dominion’s sequential volume trends were 250 bps better than seasonality. Saia’s July sequential tonnage trend was slightly subseasonal, but it implemented a 7.1% general rate increase on July 6, creating some short-term volatility, according to the report.
| Carrier | July performance vs seasonality | Notable action |
|---|---|---|
| ArcBest (NASDAQ: ARCB) | 360 bps better | Tonnage off 1% vs typical 4.6% June–July decline |
| XPO (NYSE: XPO) | 400 bps better | Customers “a lot of positivity” |
| Old Dominion (NASDAQ: ODFL) | 250 bps better | Sequential volume above seasonal norms |
| Saia (NASDAQ: SAIA) | Slightly subseasonal | 7.1% general rate increase effective July 6 |
XPO noted “a lot of positivity from customers,” with twice as many of its customers expecting their businesses to accelerate in the back half of the year, FreightWaves said.
Supplier deliveries tighten, inventories stay low
The ISM’s supplier deliveries subindex — which measures delivery performance of suppliers to manufacturing organizations — came in at 58.9, up 1.5 points from June. The reading signaled slower deliveries and potential supply chain constraints for an eighth straight month. Of the 13 manufacturing industries tracked, no industries reported that supplier deliveries were faster in July compared to June.
Customers’ inventories remained too low, and the sequential drop of 1.6 points suggests shippers are not building stock even as new orders accelerate. That combination typically supports tighter capacity and firmer rates in the freight market.
Shipper and operator implications
For freight forwarders, 3PL operators, and shippers, the data points to a firming LTL market: tonnage is accelerating, weight per shipment is climbing, and at least one carrier — Saia — has already pushed through a 7.1% general rate increase in early July. With roughly two-thirds of LTL volumes tied to industrial output, the PMI’s sustained expansion and improving new orders point to continued LTL demand growth in the months ahead, in line with the historical lead-lag relationship noted in the report.
The slower supplier deliveries reading also signals potential service delays. Shippers should factor longer transit times into planning, especially for freight touching manufacturing supply chains, and watch capacity as carriers report improving volumes.
A reading above 50 for the Institute for Supply Management’s Manufacturing PMI signals expansion, while one below 50 indicates contraction.
Watch list
FreightWaves also highlighted upcoming industry events that could shape the freight calendar: the Brokerage Compliance Symposium, the F3 Awards Dinner, and the F3: Future of Freight Festival, with experiences across Chattanooga. The F3 Awards Dinner will feature the FreightTech100, FreightTech 25, and Shipper of Choice winners.
For now, the July data — a 55.6 PMI, a seventh straight month of expansion, and 5.1% July LTL tonnage growth — gives carriers and shippers a clear signal that industrial demand is firming, with XPO reporting twice as many customers expecting acceleration in the back half of the year.
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