U.S. ISM Manufacturing PMI Increases in August; Prices Ease

The ISM U.S. manufacturing PMI improved to 48.7 in August after falling to 48.0 during July, according to the Institute for Supply Management. The June reading was 49.0. These figures are below the 50 expansion-contraction dividing line. As a result, they indicate U.S. manufacturing sector contraction for the sixth consecutive month. They remain above, however, a low of 46.9 in October of last year. An August reading of 48.8 had been expected in the Action Economics Forecast Survey.

The new orders component improved to 51.4 last month after rising to 47.1 in July. It was increased from a March low of 45.2. A higher 24.7% (NSA) of respondents reported higher new orders while a lessened 22.7% reported lower. The employment reading edged up to 43.8 from 43.4. Nine percent (NSA) of respondents reported more hiring while 22.4% reported less. The supplier deliveries component rose to 51.3 after falling to 49.3 in July. Nine percent (NSA) of respondents indicated slower delivery speeds while 6.6% reported faster speeds. The inventories index increased to 49.4 from 48.9. It was the highest level in four months, up from a 46.7 May low. An increased 19.5% of respondents indicated higher inventories while 18.6% reported lower.

Offsetting these increases, the production index fell to 47.8 in August from 51.4 in July. It remained up, however, from a 44.0 April low. Seventeen percent (NSA) of respondents indicated higher production while 21.1% reported lower. The order backlog index fell to 44.7 (NSA) after rising to 46.8 in July. A lessened 16.3% of respondents reported higher order backlogs while 27.0% indicated lower.

The prices index eased to 63.7 last month from 64.8 in July, remaining below a high of 69.8 in April, but above its low of 39.4 in December 2022. A lessened 33.5% of respondents reported higher prices while a slightly increased 6.1% reported lower.

In other series, the export orders index rose to a seasonally adjusted 47.6 in August from 46.1 in July. It was the highest level in five months, up from a 40.1 May low. The imports index fell to 46.0 last month from 47.6 in July. The index is below a high of 52.6 in February.

The ISM figures are based on responses from over 400 purchasing and supply executives from 18 industries, which are weighted according to each industry’s contribution to GDP. These data are diffusion indexes where a reading above 50 indicates expansion; below 50 indicates contraction. The ISM Manufacturing PMI is a composite index based on the diffusion indexes of five of the indexes (seasonally adjusted) with equal weights: New Orders, Production, Employment, Supplier Deliveries, and Inventories. 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.