US manufacturing growth slowed in August, with ISM PMI Manufacturing easing from 55.6 to 54.6, below 55.3 consensus, while remaining firmly in expansion for eighth straight month. Production held up comparatively well, slipping from 58.5 to 58.3, but new orders lost more momentum, falling from 56.7 to 53.7. ISM said August headline reading was historically consistent with around 2.4% annualized real GDP growth.
Other components also pointed to softer momentum. Employment declined from 52.8 to 51.2, while Backlog of Orders fell from 55.0 to 51.8 and Imports from 55.7 to 52.5. Inventories edged down from 51.2 to 50.6. New Export Orders provided a modest offset, rising from 53.0 to 53.2, while Supplier Deliveries increased from 58.9 to 59.3, indicating delivery times slowed at a faster pace.
Price pressures remained notably elevated despite slower activity. Prices Index was unchanged at 71.1, slightly below 72 expected but still firmly in increasing territory for 23rd straight month. Taken together, August report points to manufacturing sector that is still expanding at a solid pace but losing some momentum across orders, hiring and backlogs, while cost pressures remain persistent.
Data Summary
| Indicator | August | July | Trend |
|---|---|---|---|
| PMI Manufacturing | 54.6 | 55.6 | Expansion slowed |
| New Orders | 53.7 | 56.7 | Growth slowed |
| Production | 58.3 | 58.5 | Growth slowed slightly |
| Employment | 51.2 | 52.8 | Growth slowed |
| Supplier Deliveries | 59.3 | 58.9 | Deliveries slowed faster |
| Inventories | 50.6 | 51.2 | Growth slowed |
| Customers’ Inventories | 42.8 | 40.7 | Still too low |
| Prices | 71.1 | 71.1 | Unchanged, elevated |
| Backlog of Orders | 51.8 | 55.0 | Growth slowed |
| New Export Orders | 53.2 | 53.0 | Growth accelerated slightly |
| Imports | 52.5 | 55.7 | Growth slowed |
Consensus: PMI Manufacturing 55.3; Prices 72.0.
Key Takeaways
- ISM PMI Manufacturing fell from 55.6 to 54.6, below 55.3 consensus, but remained comfortably above 50 and extended manufacturing expansion to an eighth month.
- Production remained strong, easing only from 58.5 to 58.3, while New Orders slowed more clearly from 56.7 to 53.7.
- Employment weakened from 52.8 to 51.2, while Backlog of Orders dropped from 55.0 to 51.8, pointing to softer underlying momentum.
- New Export Orders bucked broader slowdown, edging up from 53.0 to 53.2.
- Prices stayed elevated at 71.1, unchanged from July and only slightly below 72.0 expected, showing little relief in input cost pressures.
- ISM said August reading corresponds historically to around 2.4% annualized real GDP growth, consistent with continued economic expansion rather than manufacturing contraction.
