Manufacturing Sector Contracts in August

The ISM Manufacturing Index registered 49.1 points in August, down 2.1 percentage points from the previous month, according to the Institute for Supply Management. Readings under 50 points denote contraction. Of the eighteen manufacturing industries, nine reported growth in August, in the following order: Textile Mills; Furniture & Related Products; Food, Beverage & Tobacco Products; Wood Products; Petroleum & 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 & Allied Products; Fabricated Metal Products; Transportation Equipment; Primary Metals; Plastics & Rubber Products; Paper Products; and Electrical Equipment, Appliances & Components.

The Employment Index registered 47.4 percent, a decrease of 4.3 percentage points from the July reading of 51.7 percent. This indicates contraction in August after 34 consecutive months of employment growth. Of eighteen manufacturing industries, six reported employment growth in August. Nine industries reporting a decrease in employment.

The New Orders Index registered 47.2 percent in August, a decrease of 3.6 percentage points when compared to the 50.8 percent reported for July. This indicates that new orders contracted after growing for one month. Three industries reported expansion, while eleven reported a decrease in new orders.

The New Export Orders Index registered 43.3 percent in August, 4.8 percentage points lower compared to the July reading of 48.1 percent, indicating that new export orders contracted for the second month in a row.

The Inventories Index registered 49.9 percent in August, an increase of 0.4 percentage point from the 49.5 percent reported for July. “The index contracted for the third straight month.

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About Author

Hugo Dante

Hugo Dante is a research associate in the Economic Policy and Research group at the ABA.