NEW YORK – The overall economy grew for the twenty-seventh straight time, while the manufacturing sector expanded for the twenty-fifth time, the Institute for Supply Management reported Thursday.
According to the ISM’s monthly report on business, the ISM index slipped to 50.6 in August from 50.9 in July.
Economists polled by Thomson Reuters predicted the index would slip to 48.5.
An index reading below 50 signals a slowing economy, while a level above 50 suggests expansion. A reading of 50 shows the sector was unchanged in the month.
“The PMI registered 50.6 percent, a decrease of 0.3 percentage point from July, indicating expansion in the manufacturing sector for the 25th consecutive month, at a slightly slower rate," said Bradley Holcomb, chair of the Institute of Supply Management's manufacturing business survey committee. “The Production Index registered 48.6 percent, indicating contraction for the first time since May of 2009, when it registered 45 percent. The New Orders and Backlog of Orders Indexes edged up slightly from July, but both indexes are indicating contraction in August at slower rates than in July. The rate of increase in prices slowed for the fourth consecutive month, dropping another 3.5 percentage points in August to 55.5 percent. The overall sentiment is one of concern and caution over the domestic and international economic environment, which is affecting customers’ confidence and willingness to place orders, at least in the short term.”
The closely watched prices paid index slid to 55.5 from 59.0. The employment index was at 51.8, down from 53.5 the prior month.
The production index decreased to 48.6 from 52.3, the new orders index rose to 49.6 from 49.2; the supplier deliveries index gained to 50.6 from 50.4; the export orders index decreased to 50.5 from 54.0; and the imports index grew to 55.5 from 53.5.
The inventories index increased to 52.3 from 49.3; the customers’ inventories index jumped to 46.5 from 44.0; and backlog of orders climbed to 46.0 from 45.0.
Respondents’ comments included:
“Earlier chemical price increases are beginning to soften.” (Chemical Products)
“Business is soft, confidence is down, and we are cutting inventory and expenses.” (Machinery)
“Exports continue to be strong — domestic weak.” (Computer & Electronic Products)
“Domestic sales are showing small improvements. International sales are showing larger improvements.” (Fabricated Metal Products)
“Demand remains constant and strong.” (Paper Products)
“Current headwinds in the national and international economic environment have increased uncertainty, and are affecting our customers’ willingness to commit to high-dollar equipment purchases.” (Transportation Equipment)
“We continue to post solid numbers, but the situation seems tenuous.” (Plastics & Rubber Products)
“Automotive business (represents 52 percent of our sales portfolio) continues to be strong. Core business has pulled back slightly.” (Apparel, Leather & Allied Products)
“Sales continue to be sluggish.” (Furniture & Related Products)
