US manufacturing activity in August contracts for the first time in 35 months

Tuesday, 03 September 2019 19:52:45 (GMT+3)   |   San Diego

Economic activity in the US manufacturing sector contracted in August, while the overall economy grew for the 124th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The August PMI registered 49.1 percent, a decrease of 2.1 percentage points from the July reading of 51.2 percent.

The New Orders Index registered 47.2 percent, a decrease of 3.6 percentage points from the July reading of 50.8 percent.

The Production Index registered 49.5 percent, a 1.3-percentage point decrease compared to the July reading of 50.8 percent.

The Employment Index registered 47.4 percent, a decrease of 4.3 percentage points from the July reading of 51.7 percent.

The Supplier Deliveries Index registered 51.4 percent, a 1.9-percentage point decrease from the July reading of 53.3 percent.

The Inventories Index registered 49.9 percent, an increase of 0.4 percentage point from the July reading of 49.5 percent.

The Prices Index registered 46 percent, a 0.9-percentage point increase from the July reading of 45.1 percent.

Of the 18 manufacturing industries, nine reported growth in August, in the following order: textile mills; furniture and related products; food, beverage and tobacco products; wood products; petroleum and coal products; nonmetallic mineral products; machinery; miscellaneous manufacturing; and chemical products.

The seven industries reporting contraction in August — in the following order — are: apparel, leather and allied products; fabricated metal products; transportation equipment; primary metals; plastics and rubber products; paper products; and electrical equipment, appliances and components.

“Comments [from supply executives] reflect a notable decrease in business confidence,” the report said. “August saw the end of the PMI expansion that spanned 35 months, with steady expansion softening over the last four months. Demand contracted, with the New Orders Index contracting, the Customers' Inventories Index recovering slightly from prior months and the Backlog of Orders Index contracting for the fourth straight month. Consumption (measured by the Production and Employment Indexes) contracted at higher levels, contributing the strongest negative numbers (a combined 5.6-percentage point decrease) to the PMI, driven by a lack of demand.”

The report continued: “Respondents expressed slightly more concern about US-China trade turbulence, but trade remains the most significant issue, indicated by the strong contraction in new export orders. Respondents continued to note supply chain adjustments as a result of moving manufacturing from China. Overall, sentiment this month declined and reached its lowest level in 2019.”

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