Economy
Manufacturing Conditions Tighten, Growth Slows: PMI
Written by David Schollaert
September 8, 2022
The S&P Global US manufacturing PMI – another measure of manufacturing – slipped to 51.5 in August, contracting for a second straight month and its lowest level in two years, as output and new sales fell further last month.
August’s results are down slightly from 52.2 in July, broadly in line with the earlier released ‘flash’ estimate of 51.3. The headline index reading was the lowest since July 2020, with the latest data indicating subdued overall health conditions across the US manufacturing sector.
The report said that output contracted for a second straight month as new orders fell for the third month in a row amid weak client demand, in turn, linked to the impact of inflation and economic uncertainty on customer spending. (Recall that a reading above 50.0 indicates growth).
“Barring the initial pandemic lockdowns months, this is the steepest downturn in US manufacturing seen since the global financial crisis in 2009,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
Contributing to weak operating conditions last month was a third successive monthly fall in new orders. Manufacturers registered a modest decline in new sales, often linking this to muted client demand following greater economic uncertainty and hikes in prices.
The rate of decrease was broadly in line with those seen in June and July, and external demand remained weak, as new export orders fell at the second-sharpest pace in 27 months, the report said.
“Worryingly, the sharpest drop in demand was recorded for business equipment and machinery, which points to falling investment spending and heightened risk aversion,” added Williamson. “Similarly, payroll growth slowed close to stalling, reflecting a growing reticence to expand workforce numbers in the face of a deteriorating demand environment.
By David Schollaert, David@SteelMarketUpdate.com
David Schollaert
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