U.S. manufacturing activity contracts in August - ISM

U.S. manufacturing activity contracts in August - ISM

A report from the Institute for Supply Management (ISM) showed on Tuesday the U.S. manufacturing sector’s activity contracted in August.

The ISM's index of manufacturing activity came in at 49.1 percent last month, down 2.1 percentage points from the July reading of 51.2 percent, and missed economists' forecast for a 51.1 percent reading.

A reading above 50 percent indicates expansion, while a reading below 50 percent indicates contraction.

According to the report, the Employment Index registered 47.4 percent, a fall of 4.3 percentage points from the July reading, while the New Orders Index stood at 47.2 percent, a drop of 3.6 percentage points from the July reading, and the Production Index came in at 49.5 percent, down 1.3-percentage point from July. At the same time, the Inventories Index was at 49.9 percent, up 0.4 percentage point from July and the Prices Index reached 46 percent, a 0.9-percentage point increase from July.

Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee said, “The past relationship between the PMI and the overall economy indicates that the PMI for August (49.1 percent) corresponds to a 1.8-percent increase in real gross domestic product (GDP) on an annualized basis."