Economy
US Manufacturing Sector Contracts Again: ISM
Written by Laura Miller
August 7, 2023
Economic activity in the US manufacturing sector contracted for the ninth month in a row in July, according to the latest report on business from the Institute for Supply Management (ISM).
The ISM’s manufacturing PMI came in at 46.4% for July. Although this was a 0.4 percentage point increase from the month before, any reading below 50% is still indicative of contraction in the sector.
“This is the ninth month of contraction and continuation of a downward trend that began in June 2022,” said Timothy Fiore, chair of the ISM manufacturing business survey committee.
“Regarding the overall economy, this figure indicates an eighth month of contraction after a 30-month period of expansion,” he added.
The new orders and production portions of the index rose from the month prior but remained in contraction territory at 47.3% and 48.3%, respectively, in July.
“The US manufacturing sector shrank again, but the uptick in the PMI indicates a marginally slower rate of contraction. The July composite index reading reflects companies continuing to manage outputs down as order softness continues.,” Fiore stated, noting that demand eased once again.
One survey respondent from the fabricated metal products segment commented: “Stable demand for the next four to six months, but longer-term uncertainty. While customer growth is projected, we cannot point to fundamentals that sustain it. Supply conditions are similar to pre-pandemic, except for energy and raw input costs. Logistics costs have settled, transit times continue to shorten, and capacities at most suppliers are sufficient.”
Another respondent in transportation equipment said demand is softening, while yet another in primary metals said their order book continues to be strong.
Laura Miller
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