US Manufacturing Growth Slows in August

The ISM Manufacturing PMI fell to 54.6 in August 2026 from July’s near four-year high of 55.6, below market expectations of 55.2. The reading nevertheless marked the eighth consecutive month of expansion in manufacturing activity, although growth moderated as new orders slowed sharply to 53.7 from 56.7. Production growth was broadly stable at 58.3, compared with 58.5 in July, while employment growth eased to 51.2 from 52.8, pointing to a softer pace of job creation in the sector. Meanwhile, manufacturers continued to highlight rising costs, supply-chain disruptions and heightened uncertainty, with tariffs and the Middle East conflict adding further pressure. The Prices Index remained elevated at 71.1, while the Supplier Deliveries Index rose to 59.3, signaling continued supply-chain delays. The Backlog of Orders Index fell sharply to 51.8, while the Imports Index declined to 52.5, suggesting weaker order pipelines and import activity.

The ISM Manufacturing PMI for the US rose to 55.6 in July 2026 from 53.3 in June, beating market expectations of 54.0 and signaling the strongest expansion in factory activity since May 2022. The improvement was driven by a sharp acceleration in output that was the fastest since November 2021 (58.5 vs. 52.2) and solid growth in new orders (56.7 vs. 56.0). Employment also returned to expansion for the first time since January 2025, with the employment index rising to 52.8 from 49.7, its highest level since August 2022. Meanwhile, cost pressures eased, while the Supplier Deliveries Index indicated slowing performance for the eighth month in a row. Manufacturing continued to benefit from businesses front-loading orders to avoid potential supply disruptions and higher costs linked to the US-Israeli conflict with Iran. At the same time, strong AI-related investment helped offset the impact of import tariffs, while low business inventories left room for further expansion.

The ISM Manufacturing PMI for the US fell to 53.3 in June 2026, down from 54.0 in May and below market expectations of 54. The latest reading indicated a slowdown in the manufacturing sector, as both output (52.2 vs. 54.3 in May) and new orders (56.0 vs. 56.8) grew at a slower pace. Employment remained in contraction territory, although the pace of job losses eased, with the employment index rising to 49.7 from 48.6. Meanwhile, the prices index declined sharply to 73.0 from 82.1, indicating some easing in cost pressures, though price growth remained elevated. Survey respondents continued to cite concerns over moderating but still high inflation, driven in part by the conflict in the Middle East. They also pointed to the risk of higher interest rates and ongoing policy uncertainty, particularly surrounding tariffs and global trade, as key headwinds for the manufacturing sector.