US manufacturing showed tentative signs of stabilization in August, with ISM Manufacturing PMI rising to 48.7 from 48.0, slightly above expectations of 48.6. Despite the improvement, the index remained in contraction for the sixth consecutive month, highlighting the strain from weak global demand and tariff-related pressures.
New orders provided a bright spot, jumping to 51.4 from 47.1 to expand for the first time since January. Export orders also improved slightly from 46.1, though they remained in contraction at 47.6. Imports weakened further from 47.6 to 46.0, while production slipped back into contraction at 47.8, down from 51.4, its first decline since May.
Labor market conditions remained fragile, with the employment index at 43.8, up from 43.4, marking a seventh straight month of contraction. Price pressures moderated slightly, with the index easing to 63.7 from 64.8, though tariff-driven increases in steel and aluminum continued to filter through supply chains, keeping costs elevated across the sector.
Overall, ISM noted that 69% of manufacturing GDP contracted in August, down from 79% in July. The PMI’s historical relationship with GDP suggests the latest reading corresponds to an annualized real GDP growth rate of about 1.8%. While the headline index remains weak, the rebound in new orders offers a glimmer of optimism that activity may be bottoming out.
