Manufacturing contracts in August, for sixth consecutive month, reports ISM

Summary

The Institute for Supply Management’s August Manufacturing Report on Business shows manufacturing output contracted for the sixth month running. The PMI registered 48.7 (below the 50 growth threshold), up 0.7 points from July, signalling slower contraction. Meanwhile the overall economy continued to expand for the 64th consecutive month. Tariffs and economic uncertainty remain top concerns for panel members.

Key Points

August PMI: 48.7, up 0.7 from July but still in contraction territory (below 50).
Manufacturing has contracted six months in a row; overall US economy is still expanding (64 months).
Seven manufacturing sectors reported growth (e.g. Textile Mills; Food, Beverage & Tobacco; Primary Metals).
Ten industries contracted, including Transportation Equipment, Machinery, Computer & Electronic Products, and Fabricated Metal Products.
Tariffs and economic uncertainty are recurring themes in panel comments, affecting pricing, planning and new-product decisions.
Manufacturing GDP: 69% contracted in August, an improvement from July’s 79% contraction reading.
ISM Chair Susan Spence expects the PMI to remain in the high-40s near term; tariff clarity and consumer sentiment will be key drivers.

Content summary

The ISM’s benchmark PMI came in at 48.7 for August — a small uptick from July but still below the 50 mark that denotes expansion. Production remains weak despite some gains in New Orders. Panel comments emphasised the disruptive effect of tariffs on costs, planning and potential reshoring decisions. Several sectors showed pockets of strength, but more industries reported contraction. Susan Spence of the ISM noted that while New Orders showed promise, production has not followed through and broader uncertainty (notably tariff policy) is dampening confidence. Looking ahead, Spence expects the PMI to hover in the high-40s unless tariff uncertainty eases and consumer sentiment improves.

Context and relevance

This ISM update matters if you work in supply chains, manufacturing, procurement or logistics: it signals ongoing pressure on production, rising input-price concerns, and planning headaches tied to tariff shifts. The mix of contracting and growing sectors highlights uneven demand and supply-side stress. For planners and decision-makers, the report underscores why inventory management, supplier diversification and tariff risk mitigation remain high priorities.

Why should I read this?

Short version — it affects orders, costs and planning. If your business buys parts, schedules production or moves product, the PMI and the tariff chatter here will change lead times, prices and margin planning. Read it so you can argue for contingency stock, supplier options or a rethink of nearshoring before the next surprise tariff lands.

Author style

Punchy: the article gives a clear snapshot — manufacturing is struggling but not collapsing. Key takeaway: tariff clarity (or the lack of it) is the single biggest near-term swing factor.