ISM Manufacturing Index: Unchanged in August

This morning the Institute for Supply Management published its monthly Manufacturing Report for August. The latest headline Purchasing Managers Index (PMI) was 52.8, unchanged from the previous month and in expansion territory. Today's headline number was above the forecast of 52.0.

Here is an exerpt from the report:

Fiore continues, “The U.S. manufacturing sector continues expanding at rates similar to the prior two months. New order rates returned to expansion levels, supplier deliveries remain at appropriate tension levels and prices softened again, reflecting movement toward supply/demand balance. According to Business Survey Committee respondents’ comments, companies continued to hire at strong rates in August, with few indications of layoffs, hiring freezes or head-count reductions through attrition. Panelists reported lower rates of quits, a positive trend. Prices expansion eased dramatically in August, which — when coupled with lead times easing — should bring buyers back into the market, improving new order levels. Sentiment remained optimistic regarding demand, with five positive growth comments for every cautious comment. Panelists continue to express unease about a softening economy, with 18 percent of comments noting concern about order book contraction. Twelve percent of panelists’ comments reflect growing worries about total supply chain inventory. Demand increased, with the (1) New Orders Index returning to expansion, (2) Customers’ Inventories Index remaining at a low level, retreating slightly compared to July and (3) Backlog of Orders Index increasing its rate of growth. Consumption (measured by the Production and Employment indexes) improved during the period, with a combined positive 1.2-percentage point impact on the Manufacturing PMI® calculation. The Employment Index returned to expansion after three months of contraction, and the Production Index lost ground but remained in growth territory. With the gains in hiring and fewer supplier delivery issues, production expansion should improve in September. Inputs — expressed as supplier deliveries, inventories and imports — continued to constrain production expansion, but to a lesser extent compared to July. The Supplier Deliveries Index indicated deliveries slowed at a slower rate in August, while the Inventories Index grew at a slower rate as well. The Imports Index expanded in August for the third consecutive month, but at a slower rate compared to July. The Prices Index increased for the 27th consecutive month, at a much slower rate compared to July. See report