The Institute for Supply Management (ISM) reported on September 1 local time that the US Manufacturing Purchasing Managers' Index (PMI) for August registered 54.6, down 1.0 point from July's 55.6 and below the market forecast of 55.2. The decline reflected slowdowns in new orders and production activity, though the index remained above the 50-point threshold separating expansion from contraction. The August reading marked the eighth consecutive month of manufacturing sector expansion and the 22nd straight month of overall economic growth, according to ISM data.
ISM Reports August Sub-Index Declines Across Production and Employment
The production index fell 0.2 points to 58.3 in August from July's 58.5. The new orders index dropped 3.0 points to 53.7 from 56.7 in the prior month. Employment declined 1.6 points to 51.2 from July's 52.8. The prices index held steady at 71.1, matching the previous month's level. The inventories index decreased 0.6 points to 50.6 from July's 51.2.
Fifteen Industries Expanded While Two Sectors Contracted in August
Fifteen industries reported growth in August, including primary metals, electrical equipment and appliances, textile mills, and furniture and related products. Two sectors contracted during the month: wood products and chemical products.
ISM Chair Attributes Slowdown to Supply Chain and Order Dynamics
Susan Spence, Chair of the ISM Manufacturing Business Survey Committee, stated that "US manufacturing activity remained in expansion territory in August, but several key indicators slowed, including new orders, order backlogs, and imports." She noted that "only one of the five sub-indices — the supplier deliveries index — increased faster than the prior month, indicating continued supply chain slowdown."
S&P Global Manufacturing PMI Exceeds Forecast at 53.9
S&P Global reported a final August manufacturing PMI of 53.9, above the market forecast of 53.2. Usama Bahti, Chief Economist at S&P Global Market Intelligence, stated that "while continued growth in the US manufacturing economy is welcome, the August data shows some cracks appearing in the sector's health." He explained that "data covering most of the second quarter and into August indicated that inventory accumulation was the primary driver of sustained growth in manufacturing output and demand. Additionally, both production and new orders growth slowed in August amid concerns that further price increases and material shortages would burden the manufacturing sector."
FAQ
What was the US ISM Manufacturing PMI for August?
The ISM Manufacturing PMI for August registered 54.6, down 1.0 point from July's 55.6 and below the market forecast of 55.2. The index remained above 50, indicating continued expansion in the manufacturing sector for the eighth consecutive month.
Why did the ISM Manufacturing PMI decline in August?
The decline was driven by slowdowns in key sub-indices. New orders fell 3.0 points to 53.7, production dropped 0.2 points to 58.3, and employment decreased 1.6 points to 51.2. ISM Chair Susan Spence attributed the slowdown to dynamics in supply chains, order backlogs, and imports, with only the supplier deliveries index showing faster growth than the prior month.
