Manufacturing Expands for Eighth Consecutive Month
In August, the U.S. manufacturing sector expanded for the eighth consecutive month but at a slightly slower pace, with the ISM Manufacturing® PMI edging down 1.0 percentage point to 54.6%. Certain demand indicators, such as the New Orders, Backlog of Orders and New Export Orders indices, were in expansion, while the Customers’ Inventories Index remained in “too low” territory and contracted at a slower pace, stepping up 2.1 percentage points to 42.8.
The New Orders Index expanded for the eighth consecutive month but at a slower pace in August, moving down 3.0 percentage points from July to 53.7%. Of the six largest manufacturing sectors, three—machinery; transportation equipment; and computer and electronic products—reported an increase in new orders. Optimism about near-term demand weakened in August, with two positive comments for every negative comment.
The New Export Orders Index expanded for the second consecutive month in August, edging up 0.2 percentage points to 53.2%. Respondents were more optimistic, with two positive comments for every negative comment. Meanwhile, the Imports Index expanded for the seventh consecutive month but at a slower pace, falling 3.2 percentage points from July to 52.5%.
The Employment Index expanded for the second consecutive month in August, but at a slower rate, stepping down 1.6 percentage points to 51.2%. Of the six largest manufacturing sectors, only one—transportation equipment—reported increased employment. For every comment on reducing head counts, 1.3 respondents noted hiring.
After declining 1.9 percentage points in July, the Prices Index was unchanged at 71.1% in August, indicating raw material costs grew for the 23rd straight month. Of the six largest manufacturing sectors, five—transportation equipment; computer and electronic parts; machinery; food & beverage and tobacco products; and chemical products—reported increased prices. The increase continued to be driven by higher steel and aluminum prices impacting the entire supply chain and the tariffs applied to most imported goods, as well as increases in petroleum-based products as a result of the Middle East conflict. Roughly 46.2% of companies reported paying higher prices, down 4.0 percentage points from 50.2% in July.
