The survey from the ISM on Tuesday did not change expectations that the Federal Reserve will cut interest rates by 25 basis points when it kicks off its long awaited easing cycle this month
U.S. manufacturing contracted at a moderate pace in August amid some improvement in employment, but a further decline in new orders and rise in inventory suggested factory activity could remain subdued for a while.
The ISM said its manufacturing PMI rose to 47.2 last month from 46.8 in July, which was the lowest reading since November. A PMI reading below 50 indicates contraction in the manufacturing sector, which accounts for 10.3 per cent of the economy. Comments from respondents in the survey were mixed. Chemical products makers reported “a noticeable slowdown in business activity.” Machinery manufacturers described new order intake as “sluggish at best.” But miscellaneous goods manufacturing said that “new orders continue to be strong.”
Despite weak demand, manufacturers faced higher prices for inputs, likely reflecting soaring freight rates. The measure of supplier deliveries fell to 50.5 from 52.6 in the prior month. A reading above 50 indicates slower deliveries. According to a Reuters survey of economists, manufacturing employment was likely unchanged in August after edging up by 1,000 jobs in July. Overall nonfarm payrolls were forecast increasing by 160,000 positions after rising 114,000 in July.
Ism Level Survey Employment Pace Reading Equipment ISM Institute For Supply Management U.S. Treasury
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