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Economic activity in the US manufacturing sector contracted in August for the sixth consecutive month, according to the latest ISM Manufacturing PMI Report. The New Orders Index grew by 4.3 percentage points to 51.4 percent after a six-month period of contraction, but this was offset by a 3.6-point decline in the Production Index, resulting in a net 0.7-point increase in the overall index compared with July.
Two of the four demand indicators improved, with the New Orders and New Export Orders indexes showing gains, while the Customers’ Inventories and Backlog of Orders indexes contracted at slightly faster rates.
Regarding output, the Production Index returned to contraction and the Employment Index edged up slightly, as panelists indicated that managing headcounts is still the norm as opposed to hiring.
Inputs (defined as supplier deliveries, inventories, prices, and imports) on net declined further into contraction territory. The Supplier Deliveries Index indicated slower deliveries, the Inventories Index improved slightly but remained in contraction territory, and prices continued to increase, though at a slower rate. The Imports Index moved further into contraction.
Sixty-nine percent of the sector’s GDP contracted in August, down from 79 percent in July. The seven manufacturing industries reporting growth in August—listed in order—are: Textile Mills; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Miscellaneous Manufacturing; and Primary Metals. The 10 industries reporting contraction in August—in the following order—are: Paper Products; Wood Products; Plastics & Rubber Products; Transportation Equipment; Furniture & Related Products; Machinery; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Chemical Products; and Fabricated Metal Products.
Eighty-nine percent of panelists surveyed expressed ongoing uncertainty and increasing prices driven by US tariffs.
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