10 manufacturing sectors report growth while seven report contraction; softening economy still a concern.

The manufacturing sector saw continued growth in August 2022, marking the 27th consecutive month of growth, according to the latest Manufacturing Purchasing Managers Index (PMI), released by the Institute for Supply Management (ISM).
The Manufacturing PMI for August registered 52.8 percent, the same as July, while all five subindexes of the Manufacturing PMI (New Orders, Production, Employment, Supplier Deliveries and Inventories) showed growth. A reading above 50 percent signals expansion, below 50 percent indicates a contracting economy.
“The U.S. manufacturing sector continues expanding at rates similar to the prior two months. New order rates returned to expansion levels, supplier deliveries remain at appropriate tension levels and prices softened again,” Timothy Fiore, chair of the ISM Manufacturing Business Survey Committee, said in a release.
The last time the Manufacturing PMI saw contraction was in April and May 2020. However, for a second straight month the figure is sitting at its lowest point since June 2020, when it registered 52.4 percent.
Supplier delivery performance recorded its fourth straight month of improvement, while price increases slowed for the second consecutive month. With hiring and total employment both expanding and lead times easing across all three categories of purchasing activity, Fiore says the sector is approaching equilibrium between supply and demand.
Five of the six largest industries (Petroleum & Coal Products; Transportation Equipment; Computer and Electronic Products; Machinery; and Food, Beverage and Tobacco Products) saw moderate-to-strong growth in August.
“The past relationship between the Manufacturing PMI and the overall economy indicates that the Manufacturing PMI for August (52.8 percent) corresponds to a 1.4-percent increase in real gross domestic product (GDP) on an annualized basis,” says Fiore.
Ten manufacturing industries reported growth in August, including Nonmetallic Mineral Products; Petroleum and Coal Products; Transportation Equipment; Computer and Electronic Products; Printing and Related Support Activities; Plastics and Rubber Products; Primary Metals; Machinery; Miscellaneous Manufacturing; and Food, Beverage and Tobacco Products.
The report says seven industries saw contraction in August compared to July: Wood Products; Apparel, Leather and Allied Products; Furniture and Related Products; Paper Products; Chemical Products; Fabricated Metal Products; and Electrical Equipment, Appliances & Components.
Responses to the ISM survey indicate companies continued to hire at strong rates in August, with fewer layoffs, quits, hiring freezes or head-count reductions through attrition. Price expansion eased dramatically in August, which—when coupled with shorter lead times—should bring buyers back and boost new orders.
The report says optimism regarding expected demand continues, however some respondents were still concerned about a softening economy, with 18 percent of comments noting order book contraction and 12 percent of comments reflecting growing worries about total supply chain inventory.
Demand increased in August, with the New Orders Index returning to expansion, the Customers’ Inventories Index retreating slightly compared to July and the Backlog of Orders Index increasing its rate of growth. Consumption (measured by the Production and Employment indexes) improved in August.
The average lead time for capital expenditures in August was 180 days, a decrease of three days compared to July. The average lead time in August for production materials was 96 days, a decrease of four days. The average lead time for maintenance, repair and operating (MRO) supplies decreased by five days, to 46 days.

The Subindexes:
- The New Orders Index registered 51.3 percent, 3.3 percentage points higher than recorded in July.
- The Production Index reading of 50.4 percent is a 3.1-percentage point decrease compared to July.
- The Prices Index registered 52.5 percent, down 7.5 percentage points compared July—the subindex’s lowest reading since June 2020.
- The Backlog of Orders Index registered 53 percent, 1.7 percentage points above July.
- The Employment Index expanded 4.3 points to 54.2 percent, after three straight months of contraction.
- The Supplier Deliveries Index reading of 55.1 percent is 0.1 percentage point lower than July.
- The Inventories Index registered 53.1 percent, 4.2 percentage points lower than July.
- The New Export Orders Index contracted by 3.2 points to 49.4 percent.
- The Imports Index remained in expansion at 52.5 percent, but 1.9 percentage points below July.