The Production Index registered 53.6 percent, 2.4 percentage points below the July reading of 56 percent. And the employment index slipped to 51.2 from 52.7. Economists expect the Labor Department to report 218,000 job gains, an unchanged unemployment rate at 5.3% and a modest pickup in wages that largely have been stagnant since the recession, after accounting for inflation.
Bradley Holcomb, chairman of the ISM’s manufacturing survey committee, said factories’ customers may have shaken by the recent drop in stock prices on Wall Street and postponed orders until they regain confidence. It has steadily come off a high of 63.0 last October down to 51.7, getting dangerously close to the 50 mark that divides growth and contraction. British manufacturing growth cooled as export orders declined for a fifth month. It also rose 0.7 percent in June. The ISM’s new-orders index dropped four.eight factors to 51.7%, the bottom since Might 2013.
The surge in unsold goods is a double-edged sword for the nation’s factories because, while it propelled the economy last quarter, businesses will probably cut back on new orders until the inventories are worked down.
US producers grew on the slowest tempo in August in additional than two years, a survey of executives discovered. An index above 51.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures. Twelve industries reported growth in employment, while three industries – Mining; Arts Entertainment & Recreation; and Professional, Scientific & Technical Services – reported contraction. Six industries, including apparel, primary metals, and computer and electronic products, said activity had contracted.
Exports have been weak due to a stronger dollar making U.S.-made goods more expensive and slumping economies around the globe curtailing demand overseas. “Manufacturing is slowing, but domestic demand remains strong”, said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures.