New York, USA – The Institute for Supply Management reported that the manufacturing Purchasing Managers’ Index (PMI) in August inched up to 47.2, marking the fifth consecutive month in contraction territory. This latest contraction has extended to 21 of the past 22 months, reflecting ongoing challenges within the manufacturing sector. Despite the slight improvement from the previous month, the August reading fell short of the forecasted 47.5, indicating continued weakness in the industry.

Timothy Fiore, Chair of the ISM Manufacturing Business Survey Committee, highlighted that while manufacturing activity remains in contraction, the pace of the decline has slowed compared to previous months. Weak demand, declining output, and accommodative inputs were key factors influencing the sector’s performance. A notable decline in New Orders, New Export Orders, and Backlog of Orders further emphasized the subdued demand, while customer inventories remained at an optimal level.

Concerns over election uncertainty and current federal monetary policy have led to subdued demand as companies show reluctance to invest in capital and inventory. Production execution decreased in August, adding pressure on profitability. However, the report indicated that suppliers still have capacity, with lead times improving and shortages becoming less severe. Notably, two of the largest manufacturing industries showed expansion in August, compared to none in July.

The ISM Manufacturing Index serves as a key indicator for the sector, with a reading above 50 indicating expansion and below 50 indicating contraction. With the latest reading at 47.2, the industry remains in contraction territory, reflecting the ongoing challenges faced by manufacturers. Historical data reveals that the index has typically ranged between 42.1 and 66.2 the month before recessions, with the current level falling below the average of 49.7.

Taking a closer look at the series from the turn of the century provides valuable insights into the long-term trends and patterns within the manufacturing sector. As the industry continues to navigate through economic uncertainties and challenges, stakeholders will need to closely monitor key indicators such as the PMI to assess the sector’s performance and plan for the future.