It hasn’t been a stellar five-month period for the U.S. manufacturing industry.
For the fifth consecutive month, U.S. manufacturing activity shrank in August, reflecting faster rates of declines in orders and production, according to a report from Bloomberg.
The Institute for Supply Management’s manufacturing gauge edged up 0.4 point to 47.2, data out Tuesday showed, Bloomberg reported. A reading below 50 indicates contraction.
The group’s measure of production slid for a fifth month — deeper into contraction territory — to the lowest level since May 2020. The gauge of new orders dropped to a 15-month low. Export orders also shrank at the fastest rate since the start of the year, Bloomberg said.
Declining orders and a persistent retreat in backlogs remain headwinds to production and illustrate a struggling manufacturing sector. While the ISM gauge of factory employment rose, it still showed a third month of contraction.
Elevated borrowing costs and uncertainty surrounding the November presidential election are prompting some companies to hold off on capital expenditures and hiring. If the Federal Reserve begins lowering interest rates later this month, as expected, that could help.
Costs also remain a headache. The ISM index of prices paid for materials rose to a three-month high of 54 in August from 52.9. After declining for most of 2023, the gauge of input costs has shown rising prices every month this year.
One favorable development in the latest ISM data is that manufacturing customers are better managing their inventory levels. A gauge of customer inventories has shown shrinking stockpiles every month since late last year, the report said.
