ISM: US Manufacturing Activity Slows in August

The Institute for Supply Management said its PMI index of manufacturing stood at 49.6 in August, falling from 49.8 the prior month, below the 50 line above which the sector is expanding.

U.S. manufacturing contracted for a third-straight month in August, with a key sector index hitting its lowest level since July 2009.

The Institute for Supply Management said its PMI index of manufacturing stood at 49.6 in August, falling from 49.8 the prior month, below the 50 line above which the sector is expanding.

"Comments from the panel generally reflect a slowdown in orders and demand, with continuing concern over the uncertain state of global economies," the institute said.

Manufacturers' reported prices were on the rebound after contracting for several months, but new orders continued to slide along with inventories.

“The Index has now signaled contraction for three consecutive months and the component data testify to fundamental weakness," said Cliff Waldman, senior economist for the Manufacturers Alliance for Productivity and Innovation (MAPI).

"New orders, the backlog of orders, production, and exports were all disturbingly below the 50 percent mark in August," Waldman added. "The sharp jump in raw materials prices add to concerns about short-term growth prospects.  Employment, which has been a  moderately strong point for U.S. manufacturing, continued to grow but at a slower pace. 

“The recent ISM reports have been somewhat at odds with the more positive manufacturing output data produced by the Federal Reserve, as weather and other types of seasonal distortions have created unusual volatility in manufacturing production measures. It is nonetheless clear that a sharply slowing global economy and policy uncertainty in the U.S. are sapping the U.S. manufacturing sector of the strength that allowed it to be a growth catalyst in the earlier quarters of recovery from the destabilizing 2007-2009 recession.  While slow growth remains the most likely short-term outcome for U.S. manufacturing, the risk of an actual factory sector contraction has risen considerably in recent weeks.”

Copyright Agence France-Presse, 2012 and IndustryWeek sources. 

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