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New orders for manufactured goods declined 1.3% in July, following a 4.8% drop in June. On the other hand, new orders for manufactured goods grew 3.5% over the year. When excluding transportation, new orders inched up 0.6% over the month and 0.7% year-over-year in July. Orders for durable goods decreased 2.8%, following a 9.4% dive in June. Year to date, durable goods orders are up 7.3%. Nondurable goods orders ticked up 0.3% in July after rising 0.4% in June. Nondurable goods orders are down 0.1% over the year.

New orders for nondefense aircraft and parts, which have been incredibly volatile in recent months, led the decrease in durable goods orders, plunging 32.7%, following June’s 52.7% plummet. In July, the largest monthly increase occurred in defense aircraft and parts, which jumped 10.2%, after rising 4.3% the prior month. The largest over-the-year changes also occurred in nondefense aircraft and parts (up 139.2%) and mining, oil field and gas field machinery (down 8.3%).

Factory shipments increased 0.9% in July, after rising 0.6% in June. Shipments over the year rose 1.2%. Shipments excluding transportation advanced 0.6% in July, following a 0.5% gain the previous month. Shipments for durable goods improved 1.5% in July, following a 0.7% increase in June, and are up 2.5% year to date. Meanwhile, nondurable goods shipments ticked up 0.3% after rising 0.4% the prior month but are down 0.1% year to date.

Unfilled orders for all manufacturing industries stayed the same in July, after increasing 0.9% in June. Unfilled orders over the year jumped 7.1%. Inventories grew 0.3%, after inching up 0.2% the prior month. Inventories increased 1.5% year-over-year. The inventories-to-shipments ratio edged down to 1.56 from 1.57 in June. The unfilled orders-to-shipments ratio for durable goods decreased to 6.87 from 7.01 in June.

The S&P Global U.S. Manufacturing PMI was 53.0 in August, up considerably from the July reading of 49.8 and the highest reading since May 2022. New orders increased for the eighth consecutive month primarily as a result of domestic sales, with international sales declining slightly. Tariffs led to steep rises in both input and output costs in August, with input cost inflation accelerating at the steepest pace in the past three years, apart from June.

Amid worries over rising prices and supply constraints due to tariffs, finished stocks of goods rose to the greatest extent in more than a year. Meanwhile, stronger sales and a buildup of inventories resulted in production growth surging from July at the fastest pace in 13 months. Average lead times improved slightly in August, with delivery times shortening despite the influx of new orders.

Although tariffs continued to weigh on business confidence, firms are more hopeful than in July, with an anticipation that demand will improve in the year ahead. As manufacturers faced new orders and completed some existing orders in August, firms increased employment levels, also buoyed by optimism regarding future production. Nonetheless, capacity remained under pressure, resulting in backlogs of work rising in August at the steepest pace since September 2022.

In August, global manufacturing activity grew at the fastest pace since June 2024, rising from 49.7 to 50.9. Output and new orders also returned to growth in August after contracting in July. New export orders continued to decline but at a slower pace than the prior month. August’s recovery is challenging the prediction of a stall in global manufacturing activity in the second half of the year. On the other hand, forward-looking indicators are more downbeat, and the surge in finished goods inventory suggests the rebound could be due largely to stockpiling rather than an improvement in demand.

India, Colombia, Greece and Spain had the highest PMI readings in August. On the other hand, the U.K., Brazil and Canada were some of the larger nations to register declines in activity. The upturn in manufacturing output occurred across the consumer, intermediate goods and investment goods categories.

Additionally, manufacturing employment rose in August after declining for 14 consecutive months. However, staffing level increase was minimal. Meanwhile, price pressures picked up, with the rises in input and output costs accelerating to six- and four-month highs, respectively. Furthermore, inflationary pressure was pronounced particularly in the U.S., which experienced the steepest rise in output costs and second-fastest increase in input costs of the nations covered.

Job openings for manufacturing increased by 41,000 to 437,000 in July. On the other hand, the June job openings level of 396,000 was revised downward from 415,000 in the previous report. Nondurable goods job openings in July rose by 23,000 to 176,000, while durable goods job openings advanced by 18,000 to 261,000. The manufacturing job openings rate increased to 3.3% from 3.0% in June but fell from 3.7% the previous year. The rate for nondurable goods manufacturing grew 0.4% to 3.5%, while it ticked up 0.2% to 3.2% for durable goods.

In the larger economy, the number of job openings dropped to 7.2 million, a decrease of 176,000 from the previous month and 323,000 from the previous year. The job openings rate declined to 4.3%, down from 4.4% in June and 4.5% last year. This data reflects an overall labor market that has eased back to pre-pandemic levels, but remains relatively tight from a historical perspective.

The number of hires in the overall economy increased 41,000 to 5.3 million in July but decreased 143,000 from the previous year. The hires rate for the overall economy stayed the same in July at 3.3%. Meanwhile, the hires rate for manufacturing ticked up 0.2% in July to 2.5%. The hires rate for nondurable goods similarly increased 0.2% to 2.7%, while the hires rate for durable goods inched up 0.1% to 2.3%.

In the larger economy, total separations, which include quits, layoffs, discharges and other separations, decreased 52,000 from June to 5.3 million and 145,000 from the previous year. The total separations rate stayed the same at 3.3% for the overall economy and at 2.5% for manufacturing. Within that rate, layoffs and discharges increased by 6,000 in July for manufacturing, while quits rose by 9,000. The quit and layoff rates continue to remain lower for manufacturing than the total nonfarm sector.

In August, the U.S. manufacturing sector contracted for the sixth consecutive month but at a slower pace than the prior month, with the ISM Manufacturing^® PMI increasing to 48.7% from 48.0% in July. Two of the demand indicators improved in August, with the New Orders and New Export Orders Indexes 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. On the other hand, the Inventories Index (49.4%) contracted at a slightly slower pace, while the Production Index returned to negative territory after growing in July, falling from 51.4% to 47.8%.

The New Orders Index expanded after six consecutive months of contraction, rising 4.3 percentage points from July. The index hasn’t shown consistent growth since a 24-month streak of expansion ended in May 2022. Of the six-largest manufacturing sectors, two—food, beverage and tobacco products and computer and electronic products— reported an increase in new orders. Despite the index’s expansion, respondents continued to note concern about near-term demand, due primarily to tariffs and uncertainty.

The New Export Orders Index contracted for the sixth consecutive month but at a slightly slower pace, 1.5 percentage points higher than July. The continued contraction is likely indicative of dampened demand amid ongoing trade tensions. Meanwhile, the Imports Index contracted for the fifth consecutive month and at a faster rate, down 1.6 percentage points to 46.0% in August. Imports continue to contract as tariff pricing results in lower demand compared to prior months.

The Employment Index contracted for the seventh consecutive month but at a slightly slower pace than the prior month, up 0.4 percentage points from July to 43.8%. Of the six-largest manufacturing sectors, none reported increased employment. Companies continued to reduce headcounts through layoffs and attrition, while opting for layoffs at an accelerating pace due to uncertainty around near- to mid-term demand. For every mention of hiring, four respondents noted reduced headcounts, a wide ratio from a historical standpoint.

The Prices Index decreased 1.1 percentage points to 63.7%, indicating prices for raw materials grew for the 11th straight month in August, but at a slower pace. The increase continues to be driven by the dramatic rise in steel and aluminum prices impacting the entire supply chain, as well as the tariffs applied to most imported goods. Roughly 33.5% of companies reported paying higher prices, down slightly from 35.4% in July but still up dramatically from 21% in January.

Nonfarm payroll employment inched up by 22,000 in August, coming in below expectations. Furthermore, June’s job gain was revised downward by 27,000 to a loss of 13,000 jobs, while July’s job gain was revised upward by 6,000 to a gain of 79,000 jobs. The 12-month average stands at 122,000 job gains per month. The unemployment rate increased 0.1% to 4.3%, while the labor force participation rate inched up 0.1% to 62.3%.

Manufacturing employment slipped by 12,000 in August, the fourth consecutive month of job losses. On the other hand, the collective job losses in June and July of 26,000 were revised upward by 7,000 jobs to a decrease of 19,000 jobs. Manufacturing employment is down 78,000 over the year. Durable goods manufacturing employment fell by 19,000 in August, while nondurable goods employment increased by 7,000. The most significant gain in manufacturing in August occurred in plastics and rubber products manufacturing, which added 4,300 jobs over the month. Meanwhile, the most significant loss occurred in transportation equipment manufacturing, which shed a whopping 14,500 jobs over the month.

The employment-population ratio stayed the same at 59.6% but is down 0.4 percentage points from a year ago. Employed persons who are part-time workers for economic reasons increased by 65,000 to 4.75 million but are down from 4.82 million in August 2024. Native-born employment is down 561,000 over the month but up 2,762,000 over the year. Meanwhile, foreign-born employment is up 50,000 over the month but down 822,000 over the year.

Average hourly earnings for all private nonfarm payroll employees rose 0.3%, or 10 cents, reaching $36.53. Over the past year, earnings have grown 3.7%. The average workweek for all employees stayed the same at 34.2 hours but edged down 0.1 hours to 40.0 hours for manufacturing employees.

In June, the S&P Cotality Case-Shiller U.S. National Home Price NSA Index recorded a 1.9% annual gain, the slowest pace since summer 2023. The 10-City Composite saw an annual increase of 2.6% in June, down from 3.4% the previous month, while the 20-City Composite rose 2.1% year-over-year, down from 2.8%. Among the 20 cities, New York again posted the highest annual gain at 7.0%, followed by Chicago at 6.1% and Cleveland at 4.5%. Tampa again recorded the lowest annual return, with prices falling 2.4%.

On a month-over-month basis, the U.S. National Index ticked up 0.1% before seasonal adjustment. On the other hand, the 10-City and 20-City Composites decreased 0.1% and 0.04%, respectively. Meanwhile, after seasonal adjustment, the National Index and 20-City Composite both dropped 0.3%, while the 10-City Composite slipped 0.1%. This marks the fourth consecutive month of seasonally adjusted declines for the National Composite Index.

For the first time in years, home price gains are below the rate of inflation. Price growth in the Midwest and Northeast is now an outlier, as several Western markets have turned negative. Cities that saw pandemic highs but now experience weakness include Tampa (down 2.4%), San Diego (down 0.6%), Dallas (down 1.0%) and San Francisco (down 2.0%).

This housing cycle seems to be settling into a similar trajectory that aligns more closely with economic fundamentals compared to the tremendous gains homeowners experienced between 2020 and 2022, where housing appreciation is generally aligned with inflation. Furthermore, demand is reorienting toward traditional industrial centers and away from the markets that boomed during the pandemic.

Consumer confidence decreased 1.3 points in August to 97.4. Despite dipping slightly, the Consumer Confidence Index remained at a level similar to those of the past quarter. Among its components, the Present Situation Index and Expectations Index declined slightly, with consumers’ pessimism about future job availability inching up while partially being offset by stronger expectations for business conditions.

The Present Situation Index, reflecting current business and labor market conditions, fell 1.6 points to 131.2. Meanwhile, the Expectations Index, which reflects consumers’ short-term outlook for income, business and labor market conditions, declined 1.2 points to 74.8, still below the recession signal threshold of 80.

Views of the current labor market situation are still poor and getting worse, with 29.7% of consumers saying jobs were “plentiful,” down slightly from July (29.9%), while 20.0% said jobs were “hard to get,” up from 18.9% the prior month and from 14.5% in January. Looking to the future, 26.8% anticipate fewer available jobs in the next six months, up slightly from 25.1% the prior month.

Mentions of tariffs were still prevalent in written responses, with consumers expressing fears they will lead to higher prices. Additionally, mentions of high prices and inflation rose again in August, and consumers’ 12-month inflation expectations picked up to 6.2% from 5.7% in July. Meanwhile, 54% of consumers, compared to 53.1% in July, expect interest rates to rise, and fewer consumers (20.9% vs. 21.4% in July) expect rates to fall.

Buying plans for cars increased in August, while buying plans for homes were stable after declining in July. Consumers’ plans for buying big-ticket items were mixed but down slightly overall in August, especially for TVs and tablets, but plans to buy washers and dryers increased. Overall, consumers’ views of their current and future financial situation improved slightly from July.

Manufacturing activity in the Fifth District deteriorated in August, but at a slower pace than the previous month, with the composite manufacturing index rising from -20 to -7. Meanwhile, the local business conditions index improved, increasing from -11 in July to 0 in August. On the other hand, manufacturers are still pessimistic about the future, and more so than in the prior month, with the outlook for future local business conditions declining from -2 in July to -10 in August. The Fifth Federal Reserve District consists of Virginia, Maryland, the Carolinas, the District of Columbia and most of West Virginia.

Among its components, shipments, new orders and employment all remained negative but contracted at a slower pace than in July, climbing to -5, -6 and -11, respectively. The vendor lead time index increased from 7 to 11. The share of firms reporting backlogs improved but remained negative, rising from -30 to -12. Meanwhile, the average growth rate of prices paid rose notably, while prices received declined slightly.

Looking ahead, firms expect the growth rate of prices paid to remain elevated and anticipate the growth rate of prices received to rise in the next 12 months. Expectations for future shipments increased from 11 to 13, while new orders stayed the same at 9. Expectations for backlogs worsened slightly, moving from -9 to -10. Meanwhile, firms maintained a cautious approach to equipment and software spending. Expectations for capital expenditures improved to -15 from -19. In sum, businesses in the Fifth District are pessimistic about prospects for future growth and are still avoiding making new investment plans.

Manufacturing activity was mostly unchanged in the Tenth District in August, with the month-over-month composite index at 1, the same as July. Meanwhile, expectations for future activity remained expansionary, rising 3 points to 11. The Tenth Federal Reserve District encompasses the western third of Missouri; all of Kansas, Colorado, Nebraska, Oklahoma and Wyoming; and the northern half of New Mexico. Durable manufacturing activity was relatively flat month-over-month, while nondurable manufacturing activity declined slightly. New orders increased modestly, while production ticked up. Shipments rose, and at a faster pace than the prior month, rising from 3 to 6.

Production improved from -3 to 0, while new orders inched up from 2 to 5. New export orders remained negative, staying the same at -15. Employment remained flat in August, rising from -11 to 0, and the average employee workweek turned positive, increasing from -9 to 3, indicating more hours worked. Backlog of orders remained negative but improved from -30 to -15. Prices received for finished product grew from 18 to 21, while prices paid for raw materials eased month-over-month, slipping from 47 to 43. Over the year, both prices received and prices for raw materials rose from 58 to 61 and from 67 to 69, respectively.

In July, survey respondents were asked about changes in purchasing activity and product demand expectations, and the responses were mixed. Thirty-six percent of firms reported slight decreases in purchase volumes compared to the previous quarter, while 9% noted a significant decline. Meanwhile, 17% cited no change and 34% reported a slight increase. Just 3% of respondents noted a significant increase. When firms were asked about customer purchases and services, 34% reported a slight decrease, while 27% noted no change. On the other hand, 24% cited a slight increase in customer purchases, while 2% reported a significant increase. Conversely, a higher share (13%) noted a significant decrease.