US manufacturing sector performed better in August, but overall picture remains weak

The US manufacturing sector showed a slight improvement in August, with the Institute for Supply Management (ISM) manufacturing PMI rising to 47.2, up from an eight-month low of 46.8 in July.
However, the PMI remains below the crucial 50 mark, indicating that the sector is still in contraction, marking the fifth consecutive month of this trend. Despite the uptick, manufacturing activity continues to be subdued, reflecting ongoing challenges in the sector.

Key components of the PMI highlight the ongoing difficulties: new orders fell to 44.6, and production also declined, with its sub-index dropping to 44.8.
These figures suggest continued weakness in demand and output. On the price front, manufacturers are facing increased costs, as indicated by the rise in the prices paid sub-index to 54.0, largely driven by higher freight rates.

Employment in the sector also remains a concern, although the contraction in factory jobs has slowed, with the employment sub-index improving to 46.0 from 43.4.
This indicates that while layoffs are continuing, they are doing so at a reduced pace.

Overall, while there are some signs of stabilization, the U.S. manufacturing sector is still grappling with significant challenges.
The ISM’s findings suggest that the sector is treading water rather than recovering strongly, despite broader economic resilience.
Moreover, with the Federal Reserve expected to cut interest rates at its upcoming meeting, there may be some relief ahead, but the sector’s outlook remains uncertain in the near term.