The U.S. manufacturing sector continued its trend towards contraction in August, marking the fifth consecutive month of decline. The Manufacturing PMI stood at 47.2%, a slight increase of 0.4% from July. Despite this, the broader economy remained in expansion mode for the 52nd month, with only a single month of decline in April 2020.
Key indicators reflect ongoing challenges within the manufacturing sector. The New Orders Index fell further to 44.6%, a decrease of 2.8% from July, while the Production Index also saw a decline, registering 44.8%, down 1.1% from the previous month. Meanwhile, the Prices Index rose to 54%, showing an increase of 1.1% over July. The Backlog of Orders Index improved slightly to 43.6%, up 1.9%, and the Employment Index increased by 2.6% to 46%.
Supply chain metrics showed mixed results. The Supplier Deliveries Index indicated slower deliveries, down 2.1 percentage points to 50.5%, while the Inventories Index rose significantly by 5.8 percentage points to 50.3%. The New Export Orders Index slightly decreased to 48.6%, and the Imports Index remained in contraction territory at 49.6%.
Fiore, a leading industry analyst, commented on the findings, noting that while manufacturing activity continues to contract, the pace has slowed compared to the previous month. Demand remains weak, with new orders and export orders declining further. Output and employment are also contracting, though at a slower rate than in July. Inventory growth suggests a mismatch between supply and demand timing.
Despite ongoing challenges, there is modest optimism that conditions may improve after the current U.S. election cycle. The electronics industry, in particular, showed signs of recovery, with a positive business outlook for the second half of the year.
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