On Monday, General Motors announced it’s making a $1 billion investment in two of its factories in Flint, Michigan — a nice sign for U.S. manufacturing. 

Overall though, the sector has been rather blah. Manufacturing was a cool spot in the hot May jobs report. Recent data from the Institute for Supply Management shows manufacturing contracted last month for the seventh month in a row. And on Monday, data from the Census Bureau showed that new orders for U.S.-made goods rose for a second month in a row, though a lot of that was tied to defense spending. 

Early in the pandemic, Americans famously bought a lot of stuff, and American factories were still playing catch-up until around late last year.

“Backlogs are mostly what has sustained manufacturing,” said Jonathan Millar, an economist with Barclays. 

But those factory backorders have mostly been filled, and Millar said that higher borrowing costs for consumers are now putting a damper on demand. 

“It seems like we may be headed for a period of weakness,” Millar said.

So manufacturing firms may be at an inflection point, said Tim Fiore with the Institute for Supply Management. Staffing up to meet that early pandemic demand wasn’t easy, he said.

Do manufacturers hold on to those workers in hopes orders will tick back up? 

“They’re probably going to have to make some decisions in the June/July timeframe here about overstaffing,” he said.

In other words, more layoffs could be coming. There are bright spots, said Chad Moutray, chief economist with the National Association of Manufacturers, like construction spending within the sector. 

“That number is just a huge hockey stick at this point,” he said. “It’s up a whopping 104.5% over the last year.”

A lot of that construction is fueled by federal investments in shoring up U.S. supply chains, Moutray said.

“Semiconductor facilities being built, obviously given the push towards electric vehicles, new facilities being built for not just that production but also for batteries,” he said.

Manufacturers are focused on how they can grow once they come out of this sluggish period, Moutray added.