The contraction of the manufacturing sector in August, as reported on Sept. 2 by ISM, marks the sixth consecutive month, following a two-month expansion preceded by 26 straight months of contraction.
The Manufacturing PMI registered 48.7% in August, a 0.7-percentage point increase compared to the 48% recorded in July.
The overall economy continued in expansion for the 64th month after one month of contraction in April 2020.
"Looking at the manufacturing economy, 69% of the sector's GDP contracted in August, down from 79% in July," said Susan Spence, chair of the Institute for Supply Management Manufacturing Business Survey Committee, in a statement. "Four percent of GDP is strongly contracting (registering a composite PMI of 45% or lower), down from 31% in July.
"The share of sector GDP with a PMI at or below 45% is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, two (Food, Beverage & Tobacco Products; and Petroleum & Coal Products) expanded in August, compared to none in July."
The index report is as follows:
Supplier Deliveries Index indicated slower delivery performance after one month in 'faster' territory, which was preceded by seven consecutive months in expansion (or 'slower') territory. The reading of 51.3% is up 2 percentage points from the 49.3% recorded in July.
Inventories Index registered 49.4%, up 0.5 percentage points compared to July's reading of 48.9%.
New Export Orders Index reading of 47.6% is 1.5 percentage points higher than the reading of 46.1% registered in July.
Imports Index registered 46%, 1.6 percentage points lower than July's reading of 47.6%.
New Orders Index indicated growth in August following a six-month period of contraction; the figure of 51.4% is 4.3 percentage points higher than the 47.1% recorded in July.
Production Index was at 47.8%, which is 3.6 percentage points lower than July's figure of 51.4%.
Prices Index registered 63.7%, down 1.1 percentage points compared to the reading of 64.8% reported in July.
Backlog of Orders Index registered 44.7%, down 2.1 percentage points compared to the 46.8% recorded in July.
Employment Index registered 43.8%, up 0.4 percentage points from July's figure of 43.4%.
What Respondents are Saying
"A 50% tariff on imports from Brazil, combined with the U.S. Department of Agriculture's elimination of the specialty sugar quota, means certified organic cane sugar — and everything made with it — is about to get significantly more expensive." (Food, Beverage & Tobacco Products)
"Orders across most product lines have decreased. Financial expectations for the rest of 2025 have been reduced. Too much uncertainty for us and our customers regarding tariffs and the U.S./global economy." (Chemical Products)
"Tariffs continue to be unstable, with suppliers adding surcharges ranging between 2.6% to 50%." (Petroleum & Coal Products)
"Tariffs continue to wreak havoc on planning/scheduling activities. New product development costs continue to increase as unexpected tariff increases are announced — for example, 50% duties on imports from India, and increases to all countries up from the original 10%. Our materials/supplies are now rising in price, so our selling pricing is again being reviewed to ensure we keep a sustainable margin. Plans to bring production back into the U.S. are impacted by higher material costs, making it more difficult to justify the return." (Computer & Electronic Products)
"The construction industry, especially home building, is still at a lower level. With new construction at a low level, our new sales are impacted. We are mainly now relying on replacement business. Cost of goods sold is higher due to tariff-impacted goods." (Machinery)
"Domestic sales remain flat but are down four percent from plan by unit volume [tariff pricing]. Export demand is falling as customers do not accept tariff impacts, which likely will require some production transfers out of the U.S. Supplier deliveries remain consistent, with ocean shipping costs dropping significantly. Tariff costs have the biggest financial impact, but also the costs of copper and of steel products." (Fabricated Metal Products)
"The trucking industry continues to contract. Our backlog continues to shrink as customers continue to hold off on buying new equipment. This current environment is much worse than the Great Recession of 2008-09. There is absolutely no activity in the transportation equipment industry. This is 100% attributable to current tariff policy and the uncertainty it has created. We are also in stagflation: Prices are up due to material tariffs, but volume is way off." (Transportation Equipment)
"Very tentative domestic market, with home building and remodeling not very active at all. Inflation, among other factors, is starting to impact consumer buying power, leading to negative signs for our order files. International markets are upended due to the unpredictability of on-again, off-again tariff activity." (Wood Products)
"We've implemented our second price increase. 'Made in the USA' has become even more difficult due to tariffs on many components. Total price increases so far: 24%; that will only offset tariffs. No influence on margin percentage, which will actually drop. In two rounds of layoffs, we have let go of about 15% of our U.S. workforce. These are high-paying and high-skilled roles: engineers, marketing, design teams, finance, IT and operations. The administration wants manufacturing jobs in the U.S., but we are losing higher-skilled and higher-paying roles. With no stability in trade and economics, capital expenditures, spending and hiring are frozen. It's survival." (Electrical Equipment, Appliances & Components)
"There is still uncertainty in the construction market. Large expansions or investments are hampered by the unknown of costing and the economy. The markets we operate in can be strong short term, but there is an underlying feeling that has you questioning for how long." (Nonmetallic Mineral Products)
