The August ISM Manufacturing Index came in at 52.8% above the consensus 52.0% and unchanged from July, and near to 53 in June. These low levels of factory growth have not been seen since June 2020. New orders returned to expansion at 51.3 from 48. Prices softened again to 52.5 vs 60, reflecting movement toward supply and demand balance. August marked the 27th consecutive month of expansion in the manufacturing sector. The hope is improved supply chain conditions; the question is does the Ukraine Russian war flow on allow for any gains?
US ISM PMI August of 2022
A number above 50.0% is indicative of expansion.
Highlights
- ISM Manufacturing PMI was steady at 52.8 in August of 2022, the same as in July and above market forecasts of 52
- New orders returned to expansion (51.3 vs 48),
- Supplier deliveries remain at appropriate tension levels (55.1 vs 55.2)
- Prices softened again (52.5 vs 60), reflecting movement toward supply/demand balance.
- Employment rebounded (54.2 vs 49.9), with few indications of layoffs, hiring freezes or head-count reductions through attrition.
- Production slowed (50.4 vs 53.5).
“Sentiment remained optimistic regarding demand, with five positive growth comments for every cautious comment. Panelists continue to express unease about a softening economy, with 18 percent of comments noting concern about order book contraction. Twelve percent reflect growing worries about total supply chain inventory”, Timothy Fiore, Chair of the ISM said
A standout from the report is that manufacturing activity held steady despite the rampant inflation and ongoing supply chain problems. Sentiment regarding demand remained strongly optimistic with hope that things improve sooner than later.
WHAT RESPONDENTS ARE SAYING
- “Demand from customers is still strong, but much of that is because there is still fear of not getting product due to constraints. They are stocking up. There will be a reckoning in the market when the music stops, and everyone’s inventories are bloated.” [Computer & Electronic Products]
- “Sales in target business softening month-over-month, down 12 percent by revenue. Inventory days are increasing.” [Chemical Products]
- “Strong sales continue. The impact of the chip shortage is slowing, and the decreasing COVID-19 resurgence in Asia is now affecting production more than chips.” [Transportation Equipment]
- “Supply in most groups is slowly increasing, but demand appears to be outpacing — causing pricing to either stabilize or increase.” [Petroleum & Coal Products]
- “Inventories are far too high, and we are on pins and needles to see how quickly and at what magnitude our busy season begins. We will start seeing that in the next few weeks.” [Food, Beverage & Tobacco Products]
- “Continue to struggle with electronic component shortages. Several smaller machine shops are (manufacturing) the pacing item for our production due to lack of direct labor machinists.” [Machinery]
- “Overall, I have seen much improvement in the availability of raw materials. However, trucking issues continued, and production capacity within some industries remains tight. I have growing concerns that as cement and mineral companies run ‘all out’ to meet demand, we will see more downtime due to maintenance (issues).” [Nonmetallic Mineral Products]
- “Demand is softening; however, we are continuing to produce to replenish inventory.” [Primary Metals]
- “Orders are still strong through the end of the year, but there is a feeling that customers may start pulling back on orders, either cancelling them or pushing them into 2023.” [Plastics & Rubber Products]
- “Business conditions are good, and demand is strong. Securing enough raw material supply to keep up is still a challenge.” [Miscellaneous Manufacturing]
From The TradersCommunity News Desk