Manufacturing economic activity remained stuck in reverse in August, according to the Institute for Supply Management’s Manufacturing ISM Report on Business.
Data show manufacturing contracted for the fifth consecutive month and for the 21st time in the last 22 months. More specifically, the Manufacturing PMI registered 47.2% in August, compared with 46.8% in the previous month.
A reading above 50% indicates a generally expanding manufacturing economy, while a reading below 50% indicates a generally contracting manufacturing economy.
On the plus side, “while still in contraction territory, U.S. manufacturing activity contracted slower compared to last month,” noted Timothy Fiore, chair of the Institute’s ISM Manufacturing Business Survey Committee, in the report’s release. (The Manufacturing ISM Report on Business is based on data collected each month from purchasing and supply chain executives across the nation.)
Five industries reported growth in April: primary metals; petroleum & coal products; furniture & related products; food, beverage & tobacco products; and computer & electronic products.
Twelve others contracted: textile mills; printing & related support activities; nonmetallic mineral products; plastics & rubber products; electrical equipment, appliances & components; fabricated metal products; transportation equipment; wood products; machinery; paper products; chemical products; and miscellaneous manufacturing.
“Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty,” Fiore said.
Indeed, several respondents cited the election in comments about what they are seeing. For example, “Business is cooling down, and we don’t expect a rebound until after the election is over,” noted a supply chain executive in the paper products industry.
Added an individual in the machinery sector: “Customers have indicated capital has been approved for equipment purchases, but they were directed to put projects on hold until the fourth quarter of 2024. This indicates the uncertainty around the election. We anticipate a strong end of the year, with a rise in backlog going into 2025.”
