Haver Analytics
Haver Analytics
| Sep 01 2023

U.S. ISM Manufacturing PMI at a Six-Month High But Below 50 for the 10th Straight Month

  • 47.6 in August vs. 46.4 in July, slightly higher than expected.
  • Production improves to the break-even level of 50 after contracting in July and June.
  • Employment contracts for the third successive month.
  • New orders contract for the 12th consecutive month
  • Prices index rises to 48.4, the highest reading since April’s 53.2.

The ISM U.S. manufacturing PMI increased to 47.6 in August from 46.4 in July and 46.0 in June, according to the Institute for Supply Management. The August manufacturing PMI, having remained below the 50 expansion-contraction dividing line, indicated that the U.S. manufacturing sector contracted for the 10th successive month but at a slightly less severe pace compared to July. The August reading, while the highest level since February’s 47.7, was below 52.9 in August 2022 and its peak of 63.8 in March 2021. A reading of 47.0 had been expected in the Action Economics Forecast Survey for August.

The production index rose to 50.0 in August from 48.3 in July, suggesting production was at an unchanged status for the month following two months of contraction. It was below 51.1 in August 2022 and a high of 67.0 in March 2021. An increased 21.0% (NSA) of respondents reported higher production in August while 20.3% reported lower. The employment index rebounded to 48.5 in August from 44.4 in July, indicating employment contracted for the third straight month but at a less severe pace. Nevertheless, the index was down from 54.2 in August 2022 and a high of 56.9 in March 2021. Fourteen percent (NSA) of respondents reported higher employment in August while an increased 18.0% reported less hiring.

The new orders index declined to 46.8 in August from 47.3 in July, indicating new orders contracted for the 12th straight month at a slightly more severe pace; it was down from an expansion-level 50.4 in August 2022. A 17.2% (NSA) of respondents reported higher new orders while 22.9% reported a decline. The inventory index fell to 44.0 in August after rising to 46.1 in July, showing inventories contracted for the sixth consecutive month at a faster pace. The readings of 44.0 in both August and June were the lowest level since January 2014. The index was down from 53.8 in August 2022 and a high of 57.0 in November 2021. Meanwhile, the supplier deliveries index rose to 48.6 in August, the highest reading since September 2022, from 46.1 in July, indicating the delivery performance of suppliers to manufacturing organizations improved for the 11th successive month. A 10.9% (NSA) of respondents reported slower delivery speeds in August while 13.7% reported faster.

The prices paid index increased to 48.4 (NSA) in August from 42.6 in July, indicating raw materials prices fell for the fourth successive month but at a slower rate of price decreases compared to July. The August index was the highest reading since April’s 53.2 and above a low of 39.4 in December 2022 but below 52.5 in August 2022 and a high of 92.1 in June 2021. A 16.4% (NSA) of respondents reported higher prices in August while 19.7% reported price declines.

In other ISM series not included in the composite index, the new export orders index rebounded to 46.5 in August from 46.2 in July, indicating new export orders contracted for the 12th time in 13 months. It was down from 49.4 in August 2022 and a high of 57.1 in February 2022. The imports index fell to 48.0 in August after increasing to 49.6 in July, remaining in a contraction territory for the 10th consecutive month and down from 52.5 in August 2022 and a high of 61.0 in June 2021. The order backlog index increased to 44.1 (NSA) in August from 42.8 in July, indicating falling backlog levels for the 11th straight month.

The ISM figures are based on responses from over 400 manufacturing purchasing executives from 20 industries, which correspond to their contribution to GDP in 50 states. These data are diffusion indexes where a reading above 50 indicates expansion. The figures from the Institute for Supply Management can be found in Haver's USECON database; further detail is found in the SURVEYS database. The expectations number is available in Haver's AS1REPNA database.

  • Winnie Tapasanun has been working for Haver Analytics since 2013. She has almost 20 years of working in the financial services industry. As Vice President and Economic Analyst at Globicus International, Inc., a New York-based company specializing in macroeconomics and financial markets, Winnie oversaw the company’s business operations, managed financial and economic data, and wrote daily reports on macroeconomics and financial markets. Prior to working at Globicus, she was Investment Promotion Officer at the New York Office of the Thailand Board of Investment (BOI) where she wrote monthly reports on the U.S. economic outlook, wrote reports on the outlook of key U.S. industries, and assisted investors on doing business and investment in Thailand. Prior to joining the BOI, she was Adjunct Professor teaching International Political Economy/International Relations at the City College of New York. Prior to her teaching experience at the CCNY, Winnie successfully completed internships at the United Nations.   Winnie holds an MA Degree from Long Island University, New York. She also did graduate studies at Columbia University in the City of New York and doctoral requirements at the Graduate Center of the City University of New York. Her areas of specialization are international political economy, macroeconomics, financial markets, political economy, international relations, and business development/business strategy. Her regional specialization includes, but not limited to, Southeast Asia and East Asia.   Winnie is bilingual in English and Thai with competency in French. She loves to travel (almost 30 countries) to better understand each country’s unique economy, fascinating culture and people as well as the global economy as a whole.

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