ISM Report Shows Contraction in August

Tempe, AZ, September 2, 2016—The August Purchasing Managers Index registered 49.4%, a decrease of 3.2 percentage points from the July reading of 52.6%, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The New Orders Index registered 49.1%, a decrease of 7.8 percentage points from the July reading of 56.9%.

The Production Index registered 49.6%, 5.8 percentage points lower than the July reading of 55.4%.

The Employment Index registered 48.3%, a decrease of 1.1 percentage points from the July reading of 49.4%.

Inventories of raw materials registered 49%, a decrease of 0.5 percentage point from the July reading of 49.5%. The Prices Index registered 53%, a decrease of 2 percentage points from the July reading of 55%, indicating higher raw materials prices for the sixth consecutive month.

Manufacturing contracted in August for the first time since February of this year, as only six of our 18 industries reported an increase in new orders in August (down from 12 in July), and only eight of our 18 industries reported an increase in production in August (down from nine in July).

Of the 18 manufacturing industries, six are reporting growth in August in the following order: Printing & Related Support Activities; Nonmetallic Mineral Products; Computer & Electronic Products; Miscellaneous Manufacturing; Food, Beverage & Tobacco Products; and Chemical Products.

The 11 industries reporting contraction in August — listed in order — are Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; Plastics & Rubber Products; Furniture & Related Products; Transportation Equipment; Machinery; Textile Mills; Paper Products; Petroleum & Coal Products; Primary Metals; and Fabricated Metal Products.