The IHS Markit US Manufacturing PMI was revised higher to 50.3 in August 2019 from a preliminary estimate of 49.9 and compared to July's final 50.4. Still, the latest reading pointed to the weakest pace of expansion in the manufacturing sector since September 2009.
The rate of production growth was among the slowest seen for over three years in August, as lacklustre client demand led increasing numbers of firms to curb output. Although the pace of increase picked up slightly, some firms attributed the rise to efforts to clear backlogs of work rather than reflecting any new inflows of orders.
Concurrently, the pace of the upturn in new business eased to a fractional rate that was the slowest for three months and among the weakest seen over the past ten years.
Deteriorating demand conditions, especially across the automotive sector, were linked to subdued client demand. External demand also weighed on new business growth, as new export orders fell at the quickest pace since August 2009, linked by many firms to trade wars and tariffs.
In line with the near-stalling of new orders, output expectations dipped to a new series low in August. Although firms were largely optimitic, many stated that uncertainty and fears of a global economic downturn weighed on confidence.
At the same time, firms remained hesitant towards hiring in August, with employment levels broadly unchanged during the month. That said, some firms stated that little change in workforce numbers was in part due to difficulties finding suitable candidates.
On the price front, historically muted rises in input prices and output charges were once again recorded by goodsproducing firms in August. A reduction in demand for inputs reportedly limited suppliers’ pricing power, and pressure to remain competitive meant that firms largely refrained from sharp rises in output charges.
Weak client demand also led to a further fall in input buying among manufacturing firms and both pre- and postproduction stocks were depleted at modest rates.
9/3/2019 1:51:53 PM