03:39 PM EDT, 07/24/2025 (MT Newswires) -- Manufacturing activity in the US Midwest region unexpectedly moved into expansion territory this month amid a rise in new orders, a survey by the Federal Reserve Bank of Kansas City showed Thursday.

The composite manufacturing index swung to 1 in July from minus 2 last month. The consensus was for a reading of zero in a survey compiled by Bloomberg.

The regional Fed attributed the improvement to nondurable manufacturing activity, while the durable component continued to drop.

"Regional factory activity inched higher in July, and expectations for future activity remained positive," Kansas City Fed Assistant Vice President Cortney Cowley said. "However, the volume of new orders grew only mildly, while backlogs fell considerably, and employment continued to decrease."

The new orders measure improved to 2 this month from June's minus 2, while shipments dropped to 3 from 8. The production index swung to minus 3 from 5. Price growth for both raw materials and finished products "cooled slightly," the Fed branch said.

The outlook for future activity continued to be positive, as the composite index edged lower to 8 in July from 9 last month. Firms continued to have positive expectations for production, new orders and employment, according to the report.

S&P Global ( SPGI ) data showed Thursday that US private-sector output growth reached a seven-month high in July as strength in the services sector helped offset weakness in manufacturing.

On Tuesday, Richmond Fed data showed that manufacturing contraction in the US Mid-Atlantic region unexpectedly deepened this month amid weakness in shipments and new orders.

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