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      Manufacturing PMI® at 47.6%; August 2023 Manufacturing ISM® Report On Business®

      Institute for Supply Management logo. (PRNewsFoto/Institute for Supply Management) (PRNewsfoto/Institute for Supply Management)

      News provided by

      Institute for Supply Management

      Sep 01, 2023, 10:00 ET

      Share this article

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      New Orders, Employment and Backlogs Contracting; Supplier Deliveries Faster; Raw Materials Inventories Contracting; Customers' Inventories Too Low; Prices Decreasing; Exports and Imports Contracting

      TEMPE, Ariz., Sept. 1, 2023 /PRNewswire/ -- Economic activity in the manufacturing sector contracted in August for the 10th consecutive month following a 28-month period of growth, say the nation's supply executives in the latest Manufacturing ISM® Report On Business®.

      The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee:

      "The August Manufacturing PMI® registered 47.6 percent, 1.2 percentage points higher than the 46.4 percent recorded in July. Regarding the overall economy, this figure indicates a ninth month of contraction after a 30-month period of expansion. The New Orders Index remained in contraction territory at 46.8 percent, 0.5 percentage point lower than the figure of 47.3 percent recorded in July. The Production Index reading of 50 percent is a 1.7-percentage point increase compared to July's figure of 48.3 percent. The Prices Index registered 48.4 percent, up 5.8 percentage points compared to the July figure of 42.6 percent. The Backlog of Orders Index registered 44.1 percent, 1.3 percentage points higher than the July reading of 42.8 percent. The Employment Index registered 48.5 percent, up 4.1 percentage points from July's reading of 44.4 percent.

      "The Supplier Deliveries Index figure of 48.6 percent is 2.5 percentage points higher than the 46.1 percent recorded in July. This is the highest reading in the past 11 months. (Supplier Deliveries is the only ISM® Report On Business® index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.)

      "The Inventories Index decreased by 2.1 percentage points to 44 percent; the July reading was 46.1 percent. The New Export Orders Index reading of 46.5 percent is 0.3 percentage point higher than July's figure of 46.2 percent. The Imports Index remained in contraction territory, registering 48 percent, 1.6 percentage points lower than the 49.6 percent reported in July."

      Fiore continues, "The U.S. manufacturing sector shrank again, but the uptick in the PMI® indicates a slower rate of contraction. The August composite index reading reflects companies managing outputs appropriately as order softness continues, but the month-over-month increase is a sign of improvement. Demand eased again, with the (1) New Orders Index contracting at a slightly faster rate, (2) New Export Orders Index continuing in contraction territory, with minimal signs of improvement and (3) Backlog of Orders Index improving for the third straight month but remaining at low levels. The Customers' Inventories Index reading indicated appropriate buyer/supplier tension, which is neutral to slightly positive for future production. Output/Consumption (measured by the Production and Employment indexes) was positive, with a combined 5.8-percentage point upward impact on the Manufacturing PMI® calculation. Panelists' companies stabilized production compared to July and continued to manage head counts, primarily through attrition. Inputs — defined as supplier deliveries, inventories, prices and imports — continued to accommodate future demand growth. The Supplier Deliveries Index indicated faster deliveries for the 11th straight month, and the Inventories Index remained in contraction territory as panelists' companies continued to mitigate inventories exposure. The Prices Index remained in 'decreasing' territory but increased a respectable 5.8 percentage points, signifying near price stability. Sentiment improved regarding manufacturing lead times, although they remain at elevated levels.

      "Of the six biggest manufacturing industries, three — Transportation Equipment; Food, Beverage & Tobacco Products; and Petroleum & Coal Products — registered growth in August.

      "Demand remains soft, but production execution is consistent with new, reduced output levels based on panelists' companies order books. Suppliers continue to have capacity. Prices are generally stable. Sixty-two percent of manufacturing gross domestic product (GDP) contracted in August, down from 92 percent in July, a positive trend for the economy. Additionally, the share of manufacturing GDP registering a composite PMI® calculation at or below 45 percent — a good barometer of overall manufacturing weakness — was 15 percent in August, compared to 25 percent in July and 44 percent in June, a clear positive," says Fiore.

      The five manufacturing industries that reported growth in August are: Printing & Related Support Activities; Transportation Equipment; Food, Beverage & Tobacco Products; Petroleum & Coal Products; and Miscellaneous Manufacturing. The 13 industries reporting contraction in August — in the following order — are: Apparel, Leather & Allied Products; Furniture & Related Products; Plastics & Rubber Products; Primary Metals; Fabricated Metal Products; Textile Mills; Electrical Equipment, Appliances & Components; Chemical Products; Computer & Electronic Products; Paper Products; Wood Products; Nonmetallic Mineral Products; and Machinery.

      WHAT RESPONDENTS ARE SAYING

      • "Further reductions in customer orders due to the economic situation and also their working down of own inventories. Backlog is dwindling, but still showing robust revenue." [Computer & Electronic Products]
      • "Demand still weak. Customer inventories are getting depleted; however, we are not seeing a real uptick in demand. General supply conditions are softening." [Chemical Products]
      • "Still seeing a slowdown in orders. We're continuing to ship to max capacity, with supply constraints still a real part of our day-to-day business operations." [Transportation Equipment]
      • "Customer orders have softened. This is likely due to customers' increased confidence in the supply chain, (which) has them reducing their inventories. Customers are also being pinched with higher interest rates. Additionally, consumers are feeling their purchasing power eroded by stubbornly high inflation, so they are purchasing less." [Food, Beverage & Tobacco Products]
      • "Fourth quarter orders falling short of projection and indicating a slowdown in customer demand, though the first quarter forecast remains solid. Unclear if this is an inventory correction. Logistics stabilized and costs are matching 2019. Shortages limited to only a few items now, but suppliers are hesitant to add or replace labor needed in light of slowing demand." [Fabricated Metal Products]
      • "General slowdown in business at the end of the third quarter. For capital equipment additions, our customers are buying only what they need for specific jobs and not adding any capital fleet material for potential future work." [Machinery]
      • "There is additional softening in the market. Customers are hesitant to provide extended forecasts with today's economic uncertainty." [Electrical Equipment, Appliances & Components]
      • "Business continues to remain strong with sales and profits both ahead of plan. The bookings were below what we planned, but that was expected due to fewer working days and summer vacations." [Miscellaneous Manufacturing]
      • "The manufacturing sector continues to be slow, and the low market prices make it difficult to stay profitable. On the positive side, laborers are showing enthusiastic employment interest. Rising energy and fuel prices are of concern to our company." [Paper Products]
      • "Business is beginning to improve moderately. Still well below 2022 levels, but it appears that the 'great inventory rebalancing' is finally coming to fruition." [Plastics & Rubber Products]
      • "Automotive volume remains strong in preparation for the United Auto Workers' potential strike at Ford, General Motors and Stellantis. Contingency plans in place for sub-tiers. Continue to have issues recruiting general labor employees. Operational efficiency suffering due to a lack of human resources. Order book remains strong and ahead of 2022." [Primary Metals]
      • "(The Federal Reserve's) actions to increase borrowing costs has dampened demand for residential investment. Recently, this slowdown plateaued somewhat, with demand stabilizing. The outlook for 2024 remains uncertain, and we continue to be cautious about building inventories." [Wood Products]

      MANUFACTURING AT A GLANCE
      August 2023

      Index

      Series
      Index

      Aug

      Series
      Index

      Jul

      Percentage

      Point

      Change

      Direction

      Rate of
      Change

      Trend*
      (Months)

      Manufacturing PMI®

      47.6

      46.4

      +1.2

      Contracting

      Slower

      10

      New Orders

      46.8

      47.3

      -0.5

      Contracting

      Faster

      12

      Production

      50.0

      48.3

      +1.7

      Unchanged

      From Contracting

      1

      Employment

      48.5

      44.4

      +4.1

      Contracting

      Slower

      3

      Supplier Deliveries

      48.6

      46.1

      +2.5

      Faster

      Slower

      11

      Inventories

      44.0

      46.1

      -2.1

      Contracting

      Faster

      6

      Customers' Inventories

      48.7

      48.7

      0.0

      Too Low

      Same

      3

      Prices

      48.4

      42.6

      +5.8

      Decreasing

      Slower

      4

      Backlog of Orders

      44.1

      42.8

      +1.3

      Contracting

      Slower

      11

      New Export Orders

      46.5

      46.2

      +0.3

      Contracting

      Slower

      3

      Imports

      48.0

      49.6

      -1.6

      Contracting

      Faster

      10

      OVERALL ECONOMY

      Contracting

      Slower

      9

      Manufacturing Sector

      Contracting

      Slower

      10

      Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.
      *Number of months moving in current direction.

      COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

      Commodities Up in Price
      Bearings; Crude Oil; Diesel Fuel; Electrical Components (10); Natural Gas* (2); Steel* (2); and Steel Products* (2).

      Commodities Down in Price
      Aluminum (3); Aluminum Products; Caustic Soda (2); Corrugate Boxes; Natural Gas* (2); Paper (4); Plastic Resins (15); Polypropylene (4); Steel* (5); Steel — Hot Rolled (4); Steel — Scrap; Steel — Stainless (2); Steel Plates; and Steel Products* (3).

      Commodities in Short Supply
      Automation Equipment; Electrical Components (35); Electrical Transmission Products; Electronic Components (33); Hydraulic Components (3); Rolling Stock; Semiconductors (33); and Valves.

      Note: The number of consecutive months the commodity is listed is indicated after each item.
      *Indicates both up and down in price.

      AUGUST 2023 MANUFACTURING INDEX SUMMARIES

      Manufacturing PMI®
      The U.S. manufacturing sector contracted in August, as the Manufacturing PMI® registered 47.6 percent, 1.2 percentage points higher than the reading of 46.4 percent recorded in July. "This is the 10th month of contraction and continuation of a downward trend that began in June 2022. That trend is reflected in the Manufacturing PMI®'s 12-month average falling to 47.8 percent. Of the five subindexes that directly factor into the Manufacturing PMI®, none are in growth territory. Of the six biggest manufacturing industries, three (Transportation Equipment; Food, Beverage & Tobacco Products; and Petroleum & Coal Products) registered growth in August. The New Orders Index logged a 12th month in contraction territory. For a third straight month, none of the 10 subindexes were above 50 percent," says Fiore. A reading above 50 percent indicates that the manufacturing sector is generally expanding; below 50 percent indicates that it is generally contracting.

      A Manufacturing PMI® above 48.7 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the August Manufacturing PMI® indicates the overall economy contracted for a ninth consecutive month after 30 straight months of expansion. "The past relationship between the Manufacturing PMI® and the overall economy indicates that the August reading (47.6 percent) corresponds to a change of minus-0.4 percent in real gross domestic product (GDP) on an annualized basis," says Fiore.

      THE LAST 12 MONTHS

      Month

      Manufacturing
      PMI®

      Month

      Manufacturing
      PMI®

      Aug 2023

      47.6

      Feb 2023

      47.7

      Jul 2023

      46.4

      Jan 2023

      47.4

      Jun 2023

      46.0

      Dec 2022

      48.4

      May 2023

      46.9

      Nov 2022

      49.0

      Apr 2023

      47.1

      Oct 2022

      50.0

      Mar 2023

      46.3

      Sep 2022

      51.0

      Average for 12 months – 47.8

      High – 51.0

      Low – 46.0

      New Orders
      ISM®'s New Orders Index contracted for the 12th consecutive month in August, registering 46.8 percent, a decrease of 0.5 percentage point compared to July's reading of 47.3 percent. "Of the six largest manufacturing sectors, only one (Transportation Equipment) reported increased new orders. New order levels contracted at a faster rate compared to July, but production was steady month to month and backlog contraction eased, signs that companies are adjusting to the new demand forecasts predicted for the balance of the year," says Fiore. A New Orders Index above 52.7 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders (in constant 2000 dollars).

      The four manufacturing industries that reported growth in new orders in August are: Nonmetallic Mineral Products; Textile Mills; Paper Products; and Transportation Equipment. Nine industries reported a decline in new orders in August, in the following order: Electrical Equipment, Appliances & Components; Furniture & Related Products; Petroleum & Coal Products; Fabricated Metal Products; Computer & Electronic Products; Machinery; Miscellaneous Manufacturing; Plastics & Rubber Products; and Chemical Products.

      New Orders

      %Higher

      %Same

      %Lower

      Net

      Index

      Aug 2023

      17.2

      59.9

      22.9

      -5.7

      46.8

      Jul 2023

      15.4

      61.2

      23.4

      -8.0

      47.3

      Jun 2023

      17.7

      57.7

      24.6

      -6.9

      45.6

      May 2023

      16.3

      54.0

      29.7

      -13.4

      42.6

      Production
      The Production Index registered 50 percent ("unchanged" status) in August, 1.7 percentage points higher than the July reading of 48.3 percent, after two months of contraction preceded by one month of expansion and five months of contraction before that. "Of the top six industries, three — Transportation Equipment; Machinery; and Food, Beverage & Tobacco Products — expanded in August. Production output is being effectively managed given current new order rates, company profitability targets and the desire to slow backlog declines," says Fiore. An index above 52.2 percent, over time, is generally consistent with an increase in the Federal Reserve Board's Industrial Production figures.

      The five industries reporting growth in production during the month of August are: Printing & Related Support Activities; Transportation Equipment; Machinery; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. The seven industries reporting a decrease in production in August — in the following order — are: Plastics & Rubber Products; Textile Mills; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Chemical Products; and Electrical Equipment, Appliances & Components. Six industries reported no change in production in August compared to July.

      Production

      %Higher

      %Same

      %Lower

      Net

      Index

      Aug 2023

      21.0

      58.7

      20.3

      +0.7

      50.0

      Jul 2023

      16.4

      64.3

      19.3

      -2.9

      48.3

      Jun 2023

      15.0

      68.1

      16.9

      -1.9

      46.7

      May 2023

      20.6

      59.5

      19.9

      +0.7

      51.1

      Employment
      ISM®'s Employment Index registered 48.5 percent in August, 4.1 percentage points higher than the July reading of 44.4 percent. "The index indicated employment contracted for a third month after two months of expansion preceded by two months of contraction. Of the six big manufacturing sectors, two (Machinery; and Transportation Equipment) expanded. Labor management sentiment at Business Survey Committee respondents' companies continue to indicate a slowdown in hiring, reflected by attrition, freezes and layoffs. In August, attrition was the primary source of head-count reductions; this method is slower compared to hiring freezes or layoffs, which suggests that panelists' companies are not driven by reducing labor costs. Right-sizing workforces is the primary goal, providing companies time to manage the trajectory as near- and moderate-term demand remains uncertain," says Fiore. An Employment Index above 50.4 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

      Of 18 manufacturing industries, two reported employment growth in August: Machinery; and Transportation Equipment. The eight industries reporting a decrease in employment in August, in the following order, are: Textile Mills; Nonmetallic Mineral Products; Paper Products; Primary Metals; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; and Fabricated Metal Products. Eight industries reported no change in employment in August compared to July.

      Employment

      %Higher

      %Same

      %Lower

      Net

      Index

      Aug 2023

      14.0

      68.0

      18.0

      -4.0

      48.5

      Jul 2023

      9.4

      73.2

      17.4

      -8.0

      44.4

      Jun 2023

      15.5

      68.1

      16.4

      -0.9

      48.1

      May 2023

      17.0

      67.2

      15.8

      +1.2

      51.4

      Supplier Deliveries†
      The delivery performance of suppliers to manufacturing organizations improved for the 11th straight month in August, as the Supplier Deliveries Index registered 48.6 percent, 2.5 percentage points higher than the 46.1 percent reported in July. The index registered 52.4 percent in September 2022, went into contraction territory in October and has been there since, with an average reading of 45.5 percent for the last nine months. Of the top six manufacturing industries, three (Petroleum & Coal Products; Food, Beverage & Tobacco Products; and Transportation Equipment) reported slower deliveries. "Panelists' comments continue to indicate that suppliers' performance is improving, in most cases. The index recorded its best performance since September 2022, when it registered 52.4 percent," says Fiore. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

      The seven manufacturing industries reporting slower supplier deliveries in August — in the following order — are: Textile Mills; Petroleum & Coal Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Primary Metals; Transportation Equipment; and Paper Products. The seven industries reporting faster supplier deliveries in August as compared to July — in the following order — are: Wood Products; Furniture & Related Products; Chemical Products; Plastics & Rubber Products; Machinery; Fabricated Metal Products; and Computer & Electronic Products.

      Supplier Deliveries

      %Slower

      %Same

      %Faster

      Net

      Index

      Aug 2023

      10.9

      75.4

      13.7

      -2.8

      48.6

      Jul 2023

      7.9

      76.3

      15.8

      -7.9

      46.1

      Jun 2023

      9.3

      72.7

      18.0

      -8.7

      45.7

      May 2023

      7.2

      72.6

      20.2

      -13.0

      43.5

      Inventories
      The Inventories Index registered 44 percent in August, 2.1 percentage points lower than the 46.1 percent reported for July. "Manufacturing inventories contracted at a faster rate compared to July. Of the six big industries, only Food, Beverage & Tobacco Products increased manufacturing inventories in August. Panelists' companies continue to watch manufacturing inventory levels judiciously as future demand remains uncertain. The readings of 44 percent in June and August are the index's lowest since January 2014 (43.9 percent)," says Fiore. An Inventories Index greater than 44.4 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

      Of 18 manufacturing industries, the three reporting higher inventories in August are: Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; and Miscellaneous Manufacturing. The 11 industries reporting contracting inventories in August — in the following order — are: Apparel, Leather & Allied Products; Textile Mills; Paper Products; Primary Metals; Furniture & Related Products; Fabricated Metal Products; Chemical Products; Computer & Electronic Products; Machinery; Plastics & Rubber Products; and Transportation Equipment.

      Inventories

      %Higher

      %Same

      %Lower

      Net

      Index

      Aug 2023

      10.4

      70.2

      19.4

      -9.0

      44.0

      Jul 2023

      12.8

      64.9

      22.3

      -9.5

      46.1

      Jun 2023

      8.2

      71.6

      20.2

      -12.0

      44.0

      May 2023

      13.5

      63.8

      22.7

      -9.2

      45.8

      Customers' Inventories†
      ISM®'s Customers' Inventories Index registered 48.7 percent in August, matching its reading for July. "Customers' inventory levels are again at an appropriate tension, as panelists report their companies' customers have the proper amount of inventory, a potential slight positive for future production," says Fiore.

      The seven industries reporting customers' inventories as too high in August are, in order: Plastics & Rubber Products; Furniture & Related Products; Paper Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Fabricated Metal Products; and Primary Metals. The five industries reporting customers' inventories as too low in August are: Textile Mills; Food, Beverage & Tobacco Products; Transportation Equipment; Machinery; and Chemical Products.

      Customers'
      Inventories

      %
      Reporting

      %Too
      High

      %About
      Right

      %Too
      Low

      Net

      Index

      Aug 2023

      75

      14.9

      67.6

      17.5

      -2.6

      48.7

      Jul 2023

      75

      16.6

      64.1

      19.3

      -2.7

      48.7

      Jun 2023

      73

      15.6

      61.2

      23.2

      -7.6

      46.2

      May 2023

      77

      20.8

      61.1

      18.1

      +2.7

      51.4

      Prices†
      The ISM® Prices Index registered 48.4 percent, 5.8 percentage points higher compared to the July reading of 42.6 percent, indicating raw materials prices decreased in August for the fourth consecutive month. The index increased compared to July (indicating a slower rate of price decreases) after a plunge into contraction (or "decreasing") territory in May. "Panelists' comments indicate that buyers and suppliers continue to aggressively negotiate price levels as commodity markets remain moderately volatile. Of the top six manufacturing industries, two (Petroleum & Coal Products; and Computer & Electronic Products) reported price increases in August. Eighty-four percent of panelists' companies reported 'same' or 'lower' prices in August, compared to 86 percent in July," says Fiore. A Prices Index above 52.9 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

      In August, the five industries that reported paying increased prices for raw materials are: Nonmetallic Mineral Products; Petroleum & Coal Products; Plastics & Rubber Products; Computer & Electronic Products; and Miscellaneous Manufacturing. The 10 industries reporting paying decreased prices for raw materials in August — in the following order — are: Textile Mills; Primary Metals; Furniture & Related Products; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Paper Products; Food, Beverage & Tobacco Products; Transportation Equipment; Chemical Products; and Machinery.

      Prices

      %Higher

      %Same

      %Lower

      Net

      Index

      Aug 2023

      16.4

      63.9

      19.7

      -3.3

      48.4

      Jul 2023

      13.9

      57.4

      28.7

      -14.8

      42.6

      Jun 2023

      11.2

      61.1

      27.7

      -16.5

      41.8

      May 2023

      15.4

      57.5

      27.1

      -11.7

      44.2

      Backlog of Orders†
      ISM®'s Backlog of Orders Index registered 44.1 percent, a 1.3-percentage point increase compared to July's reading of 42.8 percent, indicating order backlogs contracted for the 11th consecutive month (though at a slower rate in August) after a 27-month period of expansion. Of the six largest manufacturing sectors, only Chemical Products expanded order backlogs in August. "The index remains in moderate-to-strong contraction with a third straight month of slowing contraction, the result of improvements in new order rates and panelists' companies executing lower production levels," says Fiore.

      The four industries reporting growth in order backlogs in August are: Printing & Related Support Activities; Textile Mills; Paper Products; and Chemical Products. The nine industries reporting lower backlogs in August — in the following order — are: Furniture & Related Products; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Wood Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; Fabricated Metal Products; Machinery; and Miscellaneous Manufacturing.

      Backlog of
      Orders

      %
      Reporting

      %Higher

      %Same

      %Lower

      Net

      Index

      Aug 2023

      90

      14.9

      58.3

      26.8

      -11.9

      44.1

      Jul 2023

      91

      11.9

      61.8

      26.3

      -14.4

      42.8

      Jun 2023

      90

      8.3

      60.8

      30.9

      -22.6

      38.7

      May 2023

      91

      10.8

      53.3

      35.9

      -25.1

      37.5

      New Export Orders†
      ISM®'s New Export Orders Index registered 46.5 percent in August, 0.3 percentage point higher than the July reading of 46.2 percent. "The New Export Orders Index indicated that export orders contracted for the third month in a row in August after being unchanged in May, preceded by nine straight months in contraction territory and 25 months of expansion from July 2020 to July 2022. Comments continue to note the weak performance in order levels, especially from China," says Fiore.

      The two industries reporting growth in new export orders in August are: Paper Products; and Transportation Equipment. The nine industries reporting a decrease in new export orders in August — in the following order — are: Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Primary Metals; Miscellaneous Manufacturing; Plastics & Rubber Products; Computer & Electronic Products; Fabricated Metal Products; Chemical Products; and Machinery.

      New Export
      Orders

      %
      Reporting

      %Higher

      %Same

      %Lower

      Net

      Index

      Aug 2023

      73

      7.6

      77.7

      14.7

      -7.1

      46.5

      Jul 2023

      71

      5.8

      80.8

      13.4

      -7.6

      46.2

      Jun 2023

      71

      8.0

      78.6

      13.4

      -5.4

      47.3

      May 2023

      71

      9.0

      81.9

      9.1

      -0.1

      50.0

      Imports†
      ISM®'s Imports Index registered 48 percent in August, a decrease of 1.6 percentage points compared to July's figure of 49.6 percent. "Imports contracted for the 10th consecutive month, at a faster rate in August. Reduced imports are consistent with slowing demand. Shipping capacity and prices remain accommodative," says Fiore.

      The three industries reporting an increase in import volumes in August are: Primary Metals; Transportation Equipment; and Machinery. The nine industries that reported lower volumes of imports in August — listed in the following order — are: Wood Products; Furniture & Related Products; Paper Products; Computer & Electronic Products; Plastics & Rubber Products; Miscellaneous Manufacturing; Chemical Products; Electrical Equipment, Appliances & Components; and Food, Beverage & Tobacco Products. Six industries reported no change in imports in August compared to July.

      Imports

      %
      Reporting

      %Higher

      %Same

      %Lower

      Net

      Index

      Aug 2023

      84

      7.2

      81.5

      11.3

      -4.1

      48.0

      Jul 2023

      82

      8.6

      82.0

      9.4

      -0.8

      49.6

      Jun 2023

      83

      10.8

      76.9

      12.3

      -1.5

      49.3

      May 2023

      84

      7.7

      79.2

      13.1

      -5.4

      47.3

      †The Supplier Deliveries, Customers' Inventories, Prices, Backlog of Orders, New Export Orders, and Imports indexes do not meet the accepted criteria for seasonal adjustments.

      Buying Policy
      The average commitment lead time for Capital Expenditures in August was 170 days, a decrease of four days compared to July. Average lead time in August for Production Materials was 87 days, an increase of three days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies was 42 days, a decrease of four days compared to July.

      Percent Reporting

      Capital
      Expenditures

      Hand-to-
      Mouth

      30 Days

      60 Days

      90 Days

      6 Months

      1 Year+

      Average
      Days

      Aug 2023

      17

      3

      8

      14

      32

      26

      170

      Jul 2023

      15

      4

      8

      14

      32

      27

      174

      Jun 2023

      17

      5

      8

      11

      30

      29

      175

      May 2023

      16

      7

      5

      13

      32

      27

      172

      Percent Reporting

      Production
      Materials

      Hand-to-
      Mouth

      30 Days

      60 Days

      90 Days

      6 Months

      1 Year+

      Average
      Days

      Aug 2023

      8

      22

      28

      26

      10

      6

      87

      Jul 2023

      9

      26

      26

      23

      10

      6

      84

      Jun 2023

      8

      26

      23

      28

      10

      5

      83

      May 2023

      8

      25

      29

      21

      12

      5

      84

      Percent Reporting

      MRO Supplies

      Hand-to-
      Mouth

      30 Days

      60 Days

      90 Days

      6 Months

      1 Year+

      Average
      Days

      Aug 2023

      27

      38

      18

      13

      4

      0

      42

      Jul 2023

      29

      36

      18

      11

      5

      1

      46

      Jun 2023

      26

      38

      18

      12

      5

      1

      47

      May 2023

      30

      34

      18

      13

      4

      1

      45

      About This Report
      DO NOT CONFUSE THIS NATIONAL REPORT with the various regional purchasing reports released across the country. The national report's information reflects the entire U.S., while the regional reports contain primarily regional data from their local vicinities. Also, the information in the regional reports is not used in calculating the results of the national report. The information compiled in this report is for the month of August 2023.

      The data presented herein is obtained from a survey of manufacturing supply executives based on information they have collected within their respective organizations. ISM® makes no representation, other than that stated within this release, regarding the individual company data collection procedures. The data should be compared to all other economic data sources when used in decision-making.

      Data and Method of Presentation
      The Manufacturing ISM® Report On Business® is based on data compiled from purchasing and supply executives nationwide. The composition of the Manufacturing Business Survey Committee is stratified according to the North American Industry Classification System (NAICS) and each of the following NAICS-based industry's contribution to gross domestic product (GDP): Food, Beverage & Tobacco Products; Textile Mills; Apparel, Leather & Allied Products; Wood Products; Paper Products; Printing & Related Support Activities; Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Nonmetallic Mineral Products; Primary Metals; Fabricated Metal Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Furniture & Related Products; and Miscellaneous Manufacturing (products such as medical equipment and supplies, jewelry, sporting goods, toys and office supplies). The data are weighted based on each industry's contribution to GDP. According to the BEA estimates for 2021 GDP (released December 22, 2022), the six largest manufacturing subsectors are: Computer & Electronic Products; Chemical Products; Transportation Equipment; Food, Beverage & Tobacco Products; Machinery; and Petroleum & Coal Products.

      Survey responses reflect the change, if any, in the current month compared to the previous month. For each of the indicators measured (New Orders, Backlog of Orders, New Export Orders, Imports, Production, Supplier Deliveries, Inventories, Customers' Inventories, Employment and Prices), this report shows the percentage reporting each response, the net difference between the number of responses in the positive economic direction (higher, better and slower for Supplier Deliveries) and the negative economic direction (lower, worse and faster for Supplier Deliveries), and the diffusion index. Responses are raw data and are never changed. The diffusion index includes the percent of positive responses plus one-half of those responding the same (considered positive).

      The resulting single index number for those meeting the criteria for seasonal adjustments (Manufacturing PMI®, New Orders, Production, Employment and Inventories) is then seasonally adjusted to allow for the effects of repetitive intra-year variations resulting primarily from normal differences in weather conditions, various institutional arrangements, and differences attributable to non-moveable holidays. All seasonal adjustment factors are subject annually to relatively minor changes when conditions warrant them. The Manufacturing PMI® is a composite index based on the diffusion indexes of five of the indexes with equal weights: New Orders (seasonally adjusted), Production (seasonally adjusted), Employment (seasonally adjusted), Supplier Deliveries, and Inventories (seasonally adjusted).

      Diffusion indexes have the properties of leading indicators and are convenient summary measures showing the prevailing direction of change and the scope of change. A Manufacturing PMI® reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally declining. A Manufacturing PMI® above 48.7 percent, over a period of time, indicates that the overall economy, or gross domestic product (GDP), is generally expanding; below 48.7 percent, it is generally declining. The distance from 50 percent or 48.7 percent is indicative of the extent of the expansion or decline. With some of the indicators within this report, ISM® has indicated the departure point between expansion and decline of comparable government series, as determined by regression analysis. The Manufacturing ISM® Report On Business® survey is sent out to Manufacturing Business Survey Committee respondents the first part of each month. Respondents are asked to report on information for the current month for U.S. operations only. ISM® receives survey responses throughout most of any given month, with the majority of respondents generally waiting until late in the month to submit responses to give the most accurate picture of current business activity. ISM® then compiles the report for release on the first business day of the following month.

      The industries reporting growth, as indicated in the Manufacturing ISM® Report On Business® monthly report, are listed in the order of most growth to least growth. For the industries reporting contraction or decreases, those are listed in the order of the highest level of contraction/decrease to the least level of contraction/decrease.

      Responses to Buying Policy reflect the percent reporting the current month's lead time, the approximate weighted number of days ahead for which commitments are made for Capital Expenditures; Production Materials; and Maintenance, Repair and Operating (MRO) Supplies, expressed as hand-to-mouth (five days), 30 days, 60 days, 90 days, six months (180 days), a year or more (360 days), and the weighted average number of days. These responses are raw data, never revised, and not seasonally adjusted.

      ISM ROB Content
      The Institute for Supply Management® ("ISM") Report On Business® (both Manufacturing and Non-Manufacturing) ("ISM ROB") contains information, text, files, images, video, sounds, musical works, works of authorship, applications, and any other materials or content (collectively, "Content") of ISM ("ISM ROB Content"). ISM ROB Content is protected by copyright, trademark, trade secret, and other laws, and as between you and ISM, ISM owns and retains all rights in the ISM ROB Content. ISM hereby grants you a limited, revocable, nonsublicensable license to access and display on your individual device the ISM ROB Content (excluding any software code) solely for your personal, non-commercial use. The ISM ROB Content shall also contain Content of users and other ISM licensors. Except as provided herein or as explicitly allowed in writing by ISM, you shall not copy, download, stream, capture, reproduce, duplicate, archive, upload, modify, translate, publish, broadcast, transmit, retransmit, distribute, perform, display, sell, or otherwise use any ISM ROB Content.

      Except as explicitly and expressly permitted by ISM, you are strictly prohibited from creating works or materials (including but not limited to tables, charts, data streams, time-series variables, fonts, icons, link buttons, wallpaper, desktop themes, online postcards, montages, mashups and similar videos, greeting cards, and unlicensed merchandise) that derive from or are based on the ISM ROB Content. This prohibition applies regardless of whether the derivative works or materials are sold, bartered, or given away. You shall not either directly or through the use of any device, software, internet site, web-based service, or other means remove, alter, bypass, avoid, interfere with, or circumvent any copyright, trademark, or other proprietary notices marked on the Content or any digital rights management mechanism, device, or other content protection or access control measure associated with the Content including geo-filtering mechanisms. Without prior written authorization from ISM, you shall not build a business utilizing the Content, whether or not for profit.

      You shall not create, recreate, distribute, incorporate in other work, or advertise an index of any portion of the Content unless you receive prior written authorization from ISM. Requests for permission to reproduce or distribute ISM ROB Content can be made by contacting in writing at: ISM Research, Institute for Supply Management, 309 West Elliot Road, Suite 113, Tempe, Arizona 85284-1556, or by emailing [email protected]. Subject: Content Request.

      ISM shall not have any liability, duty, or obligation for or relating to the ISM ROB Content or other information contained herein, any errors, inaccuracies, omissions or delays in providing any ISM ROB Content, or for any actions taken in reliance thereon. In no event shall ISM be liable for any special, incidental, or consequential damages, arising out of the use of the ISM ROB. Report On Business®, PMI®, Manufacturing PMI®, Services PMI®, Hospital PMI®, and NMI® are registered trademarks of Institute for Supply Management®. Institute for Supply Management® and ISM® are registered trademarks of Institute for Supply Management, Inc.

      About Institute for Supply Management®
      Institute for Supply Management® (ISM®) is the first and leading not-for-profit professional supply management organization worldwide. Its community of more than 50,000 in more than 100 countries manage about US$1 trillion in corporate and government supply chain procurement annually. Founded in 1915 by practitioners, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM empowers and leads the profession through the ISM Report On Business®, its highly-regarded certification and training programs, corporate services, events and the ISM Supply Chain Capability Model™. The ISM Report On Business®, Manufacturing, Services, and Hospital, are three of the most reliable economic indicators available, providing guidance to supply management professionals, economists, analysts, and government and business leaders. For more information, please visit: www.ismworld.org. 

      The full text version of the Manufacturing ISM® Report On Business® is posted on ISM®'s website at www.ismrob.org on the first business day* of every month after 10:00 a.m. ET.

      The next Manufacturing ISM® Report On Business® featuring September 2023 data will be released at 10:00 a.m. ET on Monday, October 2, 2023.

      *Unless the New York Stock Exchange is closed.

      Contact:

      Kristina Cahill


      Report On Business® Analyst


      ISM®, ROB/Research Manager


      Tempe, Arizona


      +1 480.455.5910


      Email: [email protected]

      SOURCE Institute for Supply Management

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