August 2020 Manufacturing ISM Report On Business Says Manufacturing Grew, but Employment Contraction Continues

The Manufacturing ISM Report On Business is published monthly by the Institute for Supply Management (ISM), the largest supply management organization in the world, as well as one of the most respected.  Economic activity in the manufacturing sector grew in August, with the overall economy notching a fourth consecutive month of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

Manufacturing grew in August, as the PMI registered 56 percent, 1.8 percentage points higher than the July reading of 54.2 percent.  The PMI signaled a continued rebuilding of economic activity in August and reached its highest level of expansion since November 2018, when the index registered 58.8 percent.

ISM’s New Orders Index registered 67.6 percent in August, an increase of 6.1 percentage points compared to the 61.5 percent reported in July.  This indicates that new orders grew for the third consecutive month.

The Production Index registered 63.3 percent in August, up 1.2 percentage points from 62.1 percent in July, indicating growth for the third consecutive month.  The index achieved its highest level of performance since January 2018, when it registered 64.2 percent,

ISM’s Employment Index registered 46.4 percent in August, 2.1 percentage points higher than the July reading of 44.3 percent.  This is the 13th consecutive month of employment contraction, at a slower rate compared to July.

The delivery performance of suppliers to manufacturing organizations was slower in August, as the Supplier Deliveries Index registered 58.2 percent. This is 2.4 percentage points higher than the 55.8 percent reported in July.

The Inventories Index registered 44.4 percent in August, 2.6 percentage points lower than the 47 percent reported for July. Inventories contracted for the second straight month after two consecutive months of expansion.  This is the lowest reading for the Inventories Index since January 2014 (43.9 percent).

ISM’s Backlog of Orders Index registered 54.6 percent in August, a 2.8-percentage point increase compared to the 51.8 percent reported in July, indicating order backlogs expanded for the second consecutive month after four straight months of contraction.

Of the 18 manufacturing industries, 15 reported growth in August, in the following order: Wood Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Textile Mills; Chemical Products; Computer & Electronic Products; Primary Metals; Fabricated Metal Products; Machinery; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Electrical Equipment, Appliances & Components; Paper Products; and Transportation Equipment.  The three industries reporting contraction in August are: Printing & Related Support Activities; Petroleum & Coal Products; and Furniture & Related Products.