Input Stories

The manufacturing sector contracted for the sixth consecutive month in August, according to the ISM Manufacturing® Index, though it shrank more slowly than in July.

• The index increased to 48.7% in August from 48% in July (readings under 50 represent contraction).

More details: The new orders and new export orders indexes saw improvements, rising to 51.4%  and 47.6%, respectively.

• Meanwhile, the backlog of orders and imports indexes contracted at a faster pace, falling to 44.7% and 46.0%, respectively. 
• Inventories did slightly better than the previous month—contracting at a slower pace and reaching 49.4%.
• Lastly, production returned to contraction after growing in July, falling from 51.4% to 47.8%.

Longer term trends: The new orders index expanded after six consecutive months of contraction, increasing by 4.3 percentage points in August. That index has shown instability since May 2022.

• New export orders also contracted for the sixth straight month, but slightly more slowly—likely a sign that trade tensions are still depressing demand.
• Meanwhile, new import orders contracted for the fifth straight month at a faster rate, also likely a result of tariffs.

Prices: The prices index increased for the 11th straight month in August, but dropped 1.1 percentage points to 63.7%, indicating a slightly slower pace of growth.

• Along with the higher prices of imports due to tariffs, the spike in steel and aluminum prices has been keeping costs high throughout the supply chain.
• Roughly 33.5% of companies reported paying higher prices, a slight decrease from July but still much higher than in January, when only 21% of companies reported the same.