The U.S. manufacturing sector continued its downward trend in August, marking the fifth consecutive month of contraction. However, the pace of decline eased slightly compared to July, according to surveys from the Institute for Supply Management (ISM). This marks the 21st month of contraction in the manufacturing sector over the past 22 months. This trend highlights the sector’s ongoing struggles, standing in stark contrast to the services sector, which continues to drive broader economic growth.
Timothy Fiore, chair of the Institute for Supply Management, stated that “While still in contraction territory, U.S. manufacturing activity contracted slower compared to last month. Demand continues to be weak, output declined, and inputs stayed accommodative.”
In a separate release, S&P Global also reported contractionary conditions in the U.S. manufacturing sector last month. The Purchasing Managers’ Index (PMI) fell from 49.6 to 47.9, marking the worst reading in seven months. “The manufacturing sector acting as an increased drag on the economy midway through the third quarter. Forward looking indicators suggest this drag could intensify in the coming months,” commented Chris Williamson, chief business economist at S&P Global Market Intelligence.
The ISM Manufacturing PMI Index registered at 47.2% in August, representing a slight increase of 0.4 percentage points from July’s 46.8%, but falling short of the economist consensus estimate of 47.5%.
Key highlights from the August ISM Manufacturing PMI Report include:
* The New Orders Index contracted at a faster pace to 44.6%, down 2.8 percentage points from July’s 47.4%.
* The Production Index also worsened to 44.8%, dropping 1.1 percentage points from the previous month’s 45.9%.
* The Prices Index increased to 54%, marking an increase of 1.1 percentage points from July’s 52.9%.
* The Backlog of Orders Index rose from 41.7% to 43.6%.
* The Employment Index improved to 46%, rising by 2.6 percentage points from last month’s 43.4%.
* The New Export Orders Index eased to 48.6%, down 0.4 percentage points from July’s 49%.
