The U.S. manufacturing sector experienced contraction for the ninth consecutive month in August, according to the Manufacturing PMI®.[0] The index registered at 47.6 percent, a slight improvement from July's reading of 46.4 percent.[1] However, this figure still indicates a contraction in the overall economy. The New Orders Index also remained in contraction territory at 46.8 percent, while the Production Index saw a slight increase to 50 percent.[0]
The report highlighted that four manufacturing industries reported growth in new orders in August, including Nonmetallic Mineral Products, Textile Mills, Paper Products, and Transportation Equipment. On the other hand, nine industries reported a decline in new orders, including Electrical Equipment, Furniture, Petroleum & Coal Products, and Chemical Products.[0]
In terms of production, five industries reported growth, including Printing & Related Support Activities, Transportation Equipment, Food, Beverage & Tobacco Products, Petroleum & Coal Products, and Miscellaneous Manufacturing. However, seven industries reported a decrease in production, including Plastics & Rubber Products, Textile Mills, Nonmetallic Mineral Products, and Primary Metals.[2]
The Prices Index also saw an increase to 48.4 percent, indicating a slight improvement in pricing pressures.[0] The Backlog of Orders Index registered at 44.1 percent, reflecting a contraction in order backlogs for the 11th consecutive month.[2] The Employment Index improved to 48.5 percent, suggesting a slight increase in employment in the manufacturing sector.[2]
According to Timothy R. Fiore, Chair of the Institute for Supply Management (ISM) Manufacturing Business Survey Committee, the composite index reading for August indicates that companies are managing outputs appropriately in the face of soft order demand.[3] Fiore also noted that while there is still considerable downward pressure on the economy, the month-over-month increase in the index is a sign of improvement.[4]
In China, the Caixin/S&P Global services PMI dropped to 51.8 in August, the lowest reading since December.[5] This reflects the ongoing weak demand and economic slowdown in the country. The official manufacturing purchasing managers' index rose slightly to 49.7 in August, indicating a contraction but still an improvement over July's reading of 49.3.[6]
Overall, these reports suggest that both the U.S. and Chinese manufacturing sectors are facing challenges, with continued contraction and weak demand. While there are some signs of improvement in certain industries and indicators, there is still a long road to full recovery for the manufacturing sectors in both countries.
0. “Manufacturing PMI® at 47.6%; August 2023 Manufacturing ISM® Report On Business®” PR Newswire, 1 Sep. 2023, https://www.prnewswire.com/news-releases/manufacturing-pmi-at-47-6-august-2023-manufacturing-ism-report-on-business-301915209.html
1. “US manufacturing contracts for 10th straight month, but decline eases” DIGITALLOOK, 1 Sep. 2023, https://www.digitallook.com/news/international-economic/us-manufacturing-contracts-for-10th-straight-month–14574096.html
2. “Purchasing Managers' Index Rose to 47.6% in August” Floor Focus, 4 Sep. 2023, https://www.floordaily.net/flooring-news/purchasing-managers-index-rose-to-476-in-august
3. “Food, Beverage, and Tobacco Industry Reports Growth in August: ISM Report” Food Industry Executive, 1 Sep. 2023, https://foodindustryexecutive.com/2023/09/food-beverage-and-tobacco-industry-reports-growth-in-august-ism-report/
4. “China's August services activity slows amid sluggish demand, private survey shows” CNBC, 5 Sep. 2023, https://www.cnbc.com/2023/09/05/chinas-august-services-activity-slows-amid-sluggish-demand-caixin-pmi.html
5. “‘Economic momentum is still weak’: 4 takeaways from China’s August activity data” South China Morning Post, 5 Sep. 2023, https://www.scmp.com/economy/economic-indicators/article/3233477/chinas-economic-momentum-still-weak-4-takeaways-augusts-manufacturing-services-activity-data
6. “China’s Factory Activity Shrinks Again as Gloom Persists” Caixin Global, 31 Aug. 2023, https://www.caixinglobal.com/2023-08-31/chinas-factory-activity-shrinks-again-as-gloom-persists-102098719.html
