Economic activity in manufacturing grew in August for the eighth month in a row, according to the Institute for Supply Management (ISM) Manufacturing Purchasing Managers’ Index (PMI) Report. 

The economic indicator fell by 1% to 54.6% in August. A percentage over 50% indicates expansion.

“In August, U.S. manufacturing activity remained in expansion territory, though it has lost ground in a number of key measures — namely, the New Orders, Backlog and Imports indexes,” wrote Susan Spence, chair of the ISM’s manufacturing business survey committee, in the August report. “Of the five subindexes that make up the PMI, the only one that grew faster than last month was Supplier Deliveries (up 0.4 percentage point), indicating a continuing slowdown of the supply chain.”

Specifically, five of the six largest manufacturing industries expanded in August: transportation equipment; petroleum and coal products; computer and electronic products; machinery; and food, beverage and tobacco products. 

Contributing factors often cited by the executives which ISM anonymously polls included pricing volatility (57% of negative comments), the Iran war (30%), increasing lead times (46%) and tariffs (29%). 

The five subindexes within the PMI performed as follows: 

• New Orders decreased by 3% to 53.7%

• Production decreased by 0.2% to 58.3%

• Employment decreased by 1.6% to 51.2%

• Supplier Deliveries increased by 0.4% to 59.3% (The supplier deliveries subindex is inverse, with a score of higher than 50% indicating slower deliveries.) 

• Inventories decreased by 0.6% to 50.6%. 

Respondents to the survey noted a contradiction between economic and business factors.

“The economy is annoying; it is getting in the way of otherwise good business,” said an anonymous chemical products executive. “We are making great new products but struggling to compete when prices escalate due to things like tariffs and the conflict in the Strait of Hormuz.”