Manufacturing economic activity contracted for the 10th consecutive month in August, according to the Institute for Supply Management’s August 2023 manufacturing sector report. Coming in at 47.6%, the August Purchasing Manager’s Index registered 1.2 points higher than in July.
None of the subindexes were above 50% for the third consecutive month. Anything lower than 50% represents contraction.
“The U.S. manufacturing sector shrank again, but the uptick in the PMI indicates a slower rate of contraction. The August composite index reading reflects companies managing outputs appropriately as order softness continues, but the month-over-month increase is a sign of improvement,” said Timothy Fiore, chair of the ISM’s manufacturing business survey committee.
The new orders index and the employment index continued to contract; new orders registered 46.8%, down 0.5 points compared to the previous month, and employment was recorded as 48.5%, 4.1 points higher than July. The production index came in 1.7 points higher at 50%, giving it an “unchanged” status.
Five industries out of 18 reported growth in August: printing & related support activities; transportation equipment; food, beverage & tobacco products; petroleum & coal products; and miscellaneous manufacturing. Transportation equipment; food, beverage & tobacco products; and petroleum & coal products are three of the six largest industries.
Multiple survey respondents reported a reduction in customer demand, with one executive in the food, beverage & tobacco products industry noting, “Customer orders have softened. This is likely due to customers’ increased confidence in the supply chain, (which) has them reducing their inventories. Customers are also being pinched with higher interest rates.”