U.S. manufacturing PMI falls to 48.7 in August as sector contraction continues
Economic activity in the U.S. manufacturing sector contracted in August for the sixth consecutive month, according to the latest ISM Manufacturing PMI Report. This follows a brief two-month period of growth that was preceded by 26 straight months of contraction.
The Manufacturing PMI registered 48.7 percent in August, a 0.7-point increase from July’s 48 percent. Historically, a reading above 42.3 percent over time indicates growth in the overall economy, which has now expanded for 64 consecutive months following a one-month contraction in April 2020.
Regarding output, the Production Index returned to contraction and the Employment Index edged up slightly, as panelists indicated that managing head counts is still the norm at their companies, as opposed to hiring. Employment, inventories, and imports all remained in contraction territory, while supplier deliveries slowed after one month of faster performance.
Looking at industry performance, seven sectors — including Textile Mills, Apparel, and Food, Beverage & Tobacco Products — reported growth in August, while 10 industries, such as Paper Products, Machinery, and Transportation Equipment, experienced contraction.
What people are saying
In a recent quote, Susan Spence, MBA, Chair of the ISM Manufacturing Business Survey Committee, said, “In August, U.S. manufacturing activity contracted at a slightly slower rate, with new orders growth the biggest factor in the 0.7-percentage point gain of the Manufacturing PMI. However, since production contracted at a rate nearly equal to the expansion in new orders, the Manufacturing PMI increase was nominal."
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