August 2023 Manufacturing ISM Report On Business Reports 11th Month of Contraction for Backlog of Orders

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 contracted in August for the 10th consecutive month following a 28-month period of growth, say the nation's supply executives in the latest Manufacturing ISM Report On Business.

The U.S. manufacturing sector contracted in August, as the Manufacturing PMI registered 47.6 percent, 1.2 percentage points higher than the reading of 46.4 percent recorded in July. This is the 10th month of contraction and continuation of a downward trend that began in June 2022.

ISM’s New Orders Index contracted for the 12th consecutive month in August, registering 46.8 percent, a decrease of 0.5 percentage point compared to July’s reading of 47.3 percent.

The Production Index registered 50 percent (“unchanged” status) in August, 1.7 percentage points higher than the July reading of 48.3 percent, after two months of contraction preceded by one month of expansion and five months of contraction before that.

ISM’s Employment Index registered 48.5 percent in August, 4.1 percentage points higher than the July reading of 44.4 percent. The index indicated employment contracted for a third month after two months of expansion preceded by two months of contraction.

The delivery performance of suppliers to manufacturing organizations improved for the 11th straight month in August, as the Supplier Deliveries Index registered 48.6 percent, 2.5 percentage points higher than the 46.1 percent reported in July.

The Inventories Index registered 44 percent in August, 2.1 percentage points lower than the 46.1 percent reported for July. Manufacturing inventories contracted at a faster rate compared to July.

ISM’s Backlog of Orders Index registered 44.1 percent, a 1.3-percentage point increase compared to July’s reading of 42.8 percent, indicating order backlogs contracted for the 11th consecutive month (though at a slower rate in August) after a 27-month period of expansion. 

The five manufacturing industries that reported growth in August are: Printing & Related Support Activities; Transportation Equipment; Food, Beverage & Tobacco Products; Petroleum & Coal Products; and Miscellaneous Manufacturing. The 13 industries reporting contraction in August — in the following order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Textile Mills; Electrical Equipment, Appliances & Components; Chemical Products; Computer & Electronic Products; Paper Products; Wood Products; Nonmetallic Mineral Products; and Machinery.