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Economic activity in the manufacturing sector expanded in August for the eighth consecutive month, according to the latest ISM Manufacturing PMI Report. The US Manufacturing PMI registered 54.6 percent in August, 1 percentage point below the July figure. While US manufacturing activity remained in expansion territory, it lost ground in several key measures, including New Orders (down 3 percentage points), Backlog (down 3.2 percentage points), and Imports (also down 3.2 percentage points). New Export Orders gained 0.2 percentage point in August. Of the five subindexes that make up the PMI, the only one that grew minimally faster than last month was Supplier Deliveries (up 0.4 percentage point), indicating a continuing slowdown of the supply chain.
The Customers’ Inventories Index remained in "too low" territory, contracting at a slower rate, with the August reading 2.1 percentage points higher than in July. A "too low" status for the Customers’ Inventories Index is usually considered positive for future production.
Regarding output, the Production Index expanded for the 10th month in a row, though at a slower pace. The Employment Index remained in expansion but lost 1.6 percentage points.
Other inputs were mixed, with the Supplier Deliveries Index increasing by another 0.4 percentage point, the Inventories Index declining by 0.6 percentage point but remaining in expansion, and the Prices Index repeating its July reading of 71.1 percent.
Twenty-two percent of the sector’s gross domestic product (GDP) contracted in August, compared with 20 percent in July, with 2 percent of manufacturing GDP in strong contraction, compared with zero percent in July. Of the six largest manufacturing industries, five (Transportation Equipment; Petroleum & Coal Products; Computer & Electronic Products; Machinery; and Food, Beverage & Tobacco Products) expanded in August.
The 15 manufacturing industries reporting growth in August, listed in order, are: Primary Metals; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Textile Mills; Furniture & Related Products; Nonmetallic Mineral Products; Paper Products; Transportation Equipment; Fabricated Metal Products; Petroleum & Coal Products; Printing & Related Support Activities; Computer & Electronic Products; Plastics & Rubber Products; Machinery; and Food, Beverage & Tobacco Products. The two industries reporting a contraction in August are: Wood Products; and Chemical Products.
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