Manufacturing PMI Holds Steady as Backlogs and Hiring Build
The S&P Global Manufacturing PMI was 53.9 in August, unchanged from July. Production rose at the weakest rate since February, while new orders continued to grow at a pace similar to July. At the same time, employment rose at the fastest pace of the year as optimism increased to a three-month high.
The growth in production and new orders has slowed due to higher prices and tight supply conditions at least in part due to the conflict in the Middle East and tariff uncertainty. Manufacturers continue to build safety stock to offset potential price increases, though longer lead times have offset these efforts partially.
Additionally, backlogs of work rose for the sixth consecutive month due to higher order volumes and material shortages. Moreover, higher backlogs caused firms to increase staffing levels in anticipation of a strong year-ahead outlook. Upbeat expectations on business expansion and customer retention plans led optimism to rise to its highest level since May.
