Key facts
- US factory production fell 0.3% in August.
- Manufacturing output had risen for seven consecutive months prior to the August decline.
- The ISM Manufacturing PMI was 54.6% in August, a decrease from July's 55.6%.
- The New Orders Index expanded for the eighth consecutive month, reaching 53.7%.
- The Production Index was 58.3% in August, a slight decrease from July.
- The Prices Index remained at 71.1%, indicating continued price increases.
U.S. factory production unexpectedly declined in August, falling 0.3% after seven consecutive months of increases, according to Federal Reserve data released on Friday. Economists had anticipated a 0.3% rise in production. Despite the monthly drop, manufacturing output was still up 0.9% year-on-year in August.
The Institute for Supply Management's Purchasing Managers' Index (PMI) indicated that economic activity in the U.S. manufacturing sector expanded for the eighth consecutive month, reaching 54.6%. However, this figure was 1 percentage point lower than July's reading of 55.6%. The overall economy has been in expansion for 22 consecutive months.
Key subindexes showed mixed signals. The New Orders Index, a measure of demand, expanded for the eighth month in a row at 53.7%, though it was down 3 percentage points from July. The Production Index registered 58.3%, a slight decrease from 58.5% in July. The Prices Index remained in expansion territory at 71.1%, unchanged from the previous month.
Concerns about tariffs, inflation, and geopolitical events, such as the conflict in the Strait of Hormuz and general trade tensions, were cited by respondents as significant headwinds for the manufacturing economy. The Employment Index stood at 51.2%, indicating continued job growth, albeit at a slower pace than in July.