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August ISM Report: PMI at 59.0%, Growth for 15th Straight Month

Press release from the issuing company

(Tempe, Arizona) — Economic activity in the manufacturing sector grew in August for the 15th consecutive month, while the overall economy grew for the 34th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®. The report was issued today by Norbert J. Ore, C.P.M., chair of the Institute for Supply Management™ Manufacturing Business Survey Committee and group director, strategic sourcing and procurement, Georgia-Pacific Corporation. "The rate of growth in the manufacturing sector decelerated during August, but overall the sector is still quite positive as both new orders and production remain at high levels. August's PMI at 59 percent represents the end of a period of nine consecutive months when the PMI was at 60 percent or higher." The ISM Prices Index regained momentum as the prices manufacturers pay are driven by customer demand and energy costs. ISM's Customers' Inventories Index indicates that customer inventories are too low at this time, although the rate of decline decelerated significantly during August. The Backlog of Orders Index indicates that order backlogs increased in August. The New Export Orders and Imports Indexes continued to grow in August. Comments from respondents this month focus on energy costs, price inflation in basic materials — particularly steel — and slowing sales growth. The growth in inventories seems to be part of a "catch up" strategy to meet higher demand on the sales side; this seems to be particularly the case with the continued strength in imports. Many still rate their business as "strong," while others believe they are starting to see new orders taper off. ISM's PMI registered 59 percent in August, a decrease of 3 percentage points when compared to 62 percent in July. ISM's New Orders Index declined 3.5 percentage points from 64.7 percent in July to 61.2 percent in August. ISM's Production Index decreased 6.6 percentage points from 66.1 percent in July to 59.5 percent in August. The ISM Employment Index is at 55.7 percent for August, a decrease of 1.6 percentage points when compared to the 57.3 percent reported in July. ISM's Supplier Deliveries Index registered 63.2 percent, 1 percentage point lower than July's 64.2 percent. ISM's Inventories Index registered 51.7 percent in August, up from the 49.9 percent reported in July. ISM's Customers' Inventories Index for August is at 45.5 percent, an increase of 8 percentage points compared to the July reading of 37.5 percent. ISM's Prices Index in August is 81.5 percent, 4.5 percentage points higher than the 77 percent reported in July. ISM's Backlog of Orders Index decreased 3 percentage points, registering 55 percent in August compared to 58 percent in July. ISM's New Export Orders Index registered 54.2 percent, a decrease of 2 percentage points from July's 56.2 percent. ISM's Imports Index decreased 0.7 percentage point to 59.2 percent in August, down from 59.9 percent in July. "August was another good month for the manufacturing sector. While the near-term outlook remains positive, both the Inventories and Customers' Inventories Indexes show signs of inventory building. Such a build may be justified if it is to meet additional sales demand, and if new orders and production remain strong," said Ore. In August, 17 industries reported growth: Leather; Miscellaneous*; Furniture; Rubber & Plastic Products; Electronic Components & Equipment; Wood & Wood Products; Instruments & Photographic Equipment; Primary Metals; Chemicals; Transportation & Equipment; Industrial & Commercial Equipment & Computers; Glass, Stone & Aggregate; Printing & Publishing; Fabricated Metals; Food; Paper; and Textiles.