The US Purchasing Managers Index (PMI) for August was released Tuesday by the Institute for Supply Management (ISM), and came in at a level of 54.6, down a little from 55.6 in July.
That put the Index above the key 50 mark that separates US manufacturing expansion from contraction for the eighth straight month, continuing to reverse a multi-year downtrend.
Supply Chain Digest Says... |
 |
|
| A manager in the manufacturing industry had this to say: “Commentary this month echoes that of recent months: (1) significant availability/price challenges in commodities heavily consumed by AI, (2) great uncertainty over when the Iran conflict will end, and (3) another round of shifting U.S. tariff policy.” |
|
 |
|
What do you say? |
|
| Click here to send us your comments |
|
| |
|
|
|
ISM also says that the overall economy continued in expansion for the 22ndconsecutive month. The PMI itself tracks closely but not exactly with the overall US economy. A Manufacturing PMI above 47.5, over a period of time, generally indicates an expansion of the overall economy, according to ISM.
The other PMI metrics were mostly positive.
The New Orders Index expanded for the eighth consecutive month after four straight readings in contraction, registering 53.7, down 3 percentage points compared to July’s figure of 56.7 but again above the key 50 mark, in good news for future US manufacturing activity.
The August reading of the Production Index (58.3) was 0.2 percentage point lower than the 58.5 recorded in July, but still strong.
Prices Index remained in expansion (or ‘increasing’ territory), registering 71.1, the same reading as July, as the cost of materials and other inputs are still rising sharply.
The Backlog of Orders Index registered 51.8, down 3.2 percentage points compared to the 55 recorded in July, meaning backlogs grew in July but at a slower pace.
The Supplier Deliveries Index indicated slowing performance for the ninth month in a row after one month in ‘faster’ territory. The reading of 59.3 is up 0.4 percentage point from its July reading of 58.9 (Supplier Deliveries is the only ISM® PMI Reports index that is inversed; a reading of above 50 indicates slower deliveries, which is typical as the economy improves and customer demand increases - or the reverse.)
The Inventories Index registered 50.6, down 0.6 percentage point compared to July’s reading of 51.2. The Customers’ Inventories Index reading of 42.8 is 2.1 percentage points higher compared to the 40.7 recorded in July. That indicates supplier inventories are again declining, but at a somewhat slower rate.
Susan Spence, Chair of the Institute for Supply Management, Manufacturing Business, stated that “Looking at the manufacturing economy, 22% of the sector’s gross domestic product (GDP) contracted in August, compared to 20% in July, and 2% of manufacturing GDP was in strong contraction (defined as a composite PMI of 45 or lower), compared to zero percent in July.”
(See More Below)
|
CATEGORY SPONSOR: SOFTEON |
|
|
|
|
|
As always, the ISM report provides a graphic of the PMI scores for the last 12 months, which as can be seen below show the now eight months over 50 in s row after a long stretch of contraction since November 2022. It is now averaging 51.8 over the past year.
Source: ISM
15 of the 18 sectors tracked by ISM reported growth in June. Listed in reverse order of most growth, they are: Primary Metals; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Textile Mills; Furniture & Related Products; Nonmetallic Mineral Products; Paper Products; Transportation Equipment; Fabricated Metal Products; Petroleum & Coal Products; Printing & Related Support Activities; Computer & Electronic Products; Plastics & Rubber Products; Machinery; and Food, Beverage & Tobacco Products.
The only wo industries reporting a contraction in August were Wood Products; and Chemical Products.
The only industry in contraction was Chemical Products.
As always, there were some interesting comments from PMI survey respondents.
A manager in the chemicals sector commented that “The economy is annoying; it is getting in the way of otherwise good business. We are making great new products but struggling to compete when prices escalate due to things like tariffs and the conflict in the Strait of Hormuz. I fear that the inflation caused by these factors will lead to lower sales and lower spending power of our customers. Call it inflation! At some point, it leads to an economic downturn or at least an economic pain for many consumers. It’s an uncertain year, our second in a row.”
“Prices continue to rise on all goods. Suppliers are noting that energy, steel and labor costs are increasing very quickly. We continue to try to move products around to offset costs. We have moved more products to offshore sources to try to minimize cost impacts.” said one manager in the machinery sector.
Finally, a manager in the manufacturing industry had this to say: “Commentary this month echoes that of recent months: (1) significant availability/price challenges in commodities heavily consumed by AI, (2) great uncertainty over when the Iran conflict will end, and (3) another round of shifting U.S. tariff policy.”
|
