The latest ISM® Manufacturing PMI® Report indicates that U.S. manufacturing activity contracted for the sixth consecutive month in August, although the pace of contraction showed slight signs of easing. The Manufacturing PMI® registered at 48.7%, which is a 0.7-percentage point increase from July’s reading of 48%.
According to Susan Spence, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee, the overall economic expansion continues, having occurred for 64 months now, despite a brief contraction in April 2020. The report highlights a notable growth in new orders, which registered at 51.4% in August, marking a significant rebound after six months of decline.
Despite this positive growth in new orders, the report notes a decrease in both production and employment. The Production Index fell to 47.8%, which is a notable decline from July’s 51.4%. Meanwhile, the Employment Index saw a slight increase to 43.8%, indicating ongoing cautiousness among manufacturers regarding staffing levels.
The report also revealed that supplier deliveries are slowing, with the Supplier Deliveries Index at 51.3%, suggesting the delivery performance is returning to a more typical pace after a previous month of faster deliveries.
Spence pointed out that pricing pressures remain a concern, with the Prices Index still indicating increases, though at a slower rate, registering at 63.7%. Furthermore, raw materials inventories continue to contract, which may affect production levels in the near future.
While the manufacturing sector continues to face challenges, the report finds that 69% of the sector’s gross domestic product (GDP) contracted in August, down from 79% in July, signaling a potential stabilization. Among the six largest manufacturing industries, growth was observed in two sectors: Food, Beverage & Tobacco Products and Petroleum & Coal Products.
Despite the mixed signals in the manufacturing landscape, the uptick in new orders provides a glimmer of hope for future production levels as manufacturers adapt to ongoing economic shifts.
