US Manufacturing Activity Extends Contraction For Fifth Month: 'Demand Continues To Be Weak'

The U.S. manufacturing barometer continued its contractionary trend for the fifth consecutive month in August, though the pace of decline eased slightly compared to July, according to surveys from the Institute for Supply Management (ISM).

August marks the 21st month of contraction in the U.S. manufacturing sector over the past 22 months. This trend underscores the sector’s ongoing struggles in stark contrast to the services sector, which continues to drive broader economic growth.

“While still in contraction territory, U.S. manufacturing activity contracted slower compared to last month. Demand continues to be weak, output declined, and inputs stayed accommodative,” said Timothy Fiore, chair of the Institute for Supply Management.

In a separate release, S&P Global also revealed contractionary conditions in the U.S. manufacturing sector last month, with the Purchasing Managers’ Index (PMI) falling from 49.6 to 47.9, marking the worst reading in seven months.

“The manufacturing sector acting as an increased drag on the economy midway through the third quarter. Forward looking indicators suggest this drag could intensify in the coming months,” commented Chris Williamson, chief business economist at S&P Global Market Intelligence.

August ISM Manufacturing PMI Report: Key Highlights

• The ISM Manufacturing PMI Index came in at 47.2% in August, marking a slight increase of 0.4 percentage points from July’s 46.8%, but falling short of the economist consensus estimate of 47.5% as reported by TradingEconomics.
• The New Orders Index contracted at a faster pace to 44.6%, down 2.8 percentage points from July’s 47.4%.
• The Production Index also worsened to 44.8%, dropping 1.1 percentage points from the previous month's 45.9%.
• The Prices Index increased to 54%, marking an increase of 1.1 percentage points from July’s 52.9%.
• The Backlog of Orders Index rose from 41.7% to 43.6%.
• The Employment Index improved to 46%, rising by 2.6 percentage points from last month's 43.4%.
• The New Export Orders Index eased to 48.6%, down 0.4 percentage points from July's 49%.

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