Manufacturing sector in US sees contraction for 5th consecutive month in August
(MENAFN) In August, the US manufacturing sector experienced a contraction for the fifth consecutive month, according to a report released by the Institute for supply Management (ISM). The ISM manufacturing purchasing managers' index (PMI) recorded a reading of 47.2 percent, which represents a slight improvement from 46.8 percent in July. This figure remains below the neutral 50 percent mark, indicating that the sector is still in contraction. The index has shown contraction for 21 out of the past 22 months, reflecting ongoing challenges within the manufacturing industry.
The August PMI reading came in slightly below the market expectation of 47.5 percent, which was based on responses from over 400 industrial firms. Despite the minor increase from the previous month, the manufacturing sector continues to struggle, with weak demand and declining output persisting as key issues. The index's movement suggests a slower pace of contraction compared to the previous month, but the sector remains under significant stress.
Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, noted that while the contraction rate has eased somewhat, manufacturing activity remains weak. He highlighted that demand continues to be subdued, with companies hesitant to invest in capital and inventory due to uncertainties related to federal monetary policy and upcoming elections. This cautious approach by businesses is contributing to ongoing challenges in production and profitability.
Fiore also pointed out that production execution has decreased compared to July, further exacerbating pressures on profitability. The persistent reluctance to invest and the challenging economic conditions are putting additional strain on the manufacturing sector, making it difficult for the industry to achieve substantial recovery in the near term.
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