September 01, 2023 | 10:46
U.S. ISM Manufacturing PMI — The Gains of August
The U.S. ISM manufacturing PMI jumped 1.2 pts to 47.6 in August (exceeding expectations), marking an increase for the second straight month. Still, the gauge has held below the 50-mark—which indicates shrinking activity—for 10 straight months. That’s the longest stretch in contraction terrain since the financial crisis.
Although new orders declined (down 0.5 pts to 46.8), production expanded for the first time in three months (+1.7 pts to 50.0). Meantime, a measure of prices paid spiked 5.8 pts to 48.4—costs are still contracting, but at a slower pace. Inventories fell 2.1 pts to 44.0, matching June’s level. That’s the lowest since the start of 2014, suggesting the overstock seen through 2022 is being cleared up. Order backlogs and supplier deliveries stayed below the 50-mark as well.
The employment index jumped 4.1 pts to 48.5. This is in-line with the August nonfarm payrolls report released earlier this morning, which showed a pick-up in manufacturing jobs.
In a separate report, construction spending climbed 0.7% in July, extending a string of gains (residential +1.4, non-residential +0.1%). And, manufacturing construction picked back up.
Bottom Line: The ISM manufacturing PMI climbed again in August. While the headline figure held under the 50-mark for the 10th month in a row, at least the pace of contraction continued to slow. After taking a hit through much of last year, it looks like the manufacturing sector is finding a trough.