US manufacturing slows for 2nd month

WASHINGTON (ICIS)–US manufacturing growth declined in August for the second month in a row, a key industry survey said on Tuesday, as the pace of new orders, production, employment and export trade all fell from the July level.

In its monthly purchasing managers index (PMI), the Institute for Supply Management (ISM) said that the index fell by 1.6 percentage points in August from July to a reading of 51.1% and followed a 0.8-point decline in that prior month.

The 51.1% reading is the lowest PMI score in the last 12 months and is down from the most recent high-water mark of 57.9% seen in October last year.

The PMI is a composite of supplier responses to the ISM’s monthly survey of 10 different business performance measures in 18 major manufacturing sectors. Among the performance areas are new orders, employment, materials prices, imports and exports.

A PMI reading above 50% indicates the US manufacturing sector is expanding, while a reading below 50% means that production is in contraction.

The index reached its most recent low point of 33.1% in December 2008 during the 2008-2009 Great Recession.

Among the PMI’s composite measures in August, the institute noted that new orders for manufactured goods fell by 4.8% from July, production was off by 2.4%, employment declined by 1.5% and exports fell by 1.5%.

The ISM said that its members expressed “a continuing concern over export growth”, perhaps reflecting economic troubles in east Asia, particularly China.

The PMI had seen a six-month run of declining or flat readings that ended in May when the index showed renewed growth.

That expansion, however, lasted only through the June survey before falling off again in July and now declining further in August.

Among the 18 manufacturing sectors tracked by the ISM, 10 reported expansion in August, including chemical manufacturers and producers of plastics and rubber products.

Six industries reported contraction in August, including apparel, primary metals, electrical equipment, appliances, transportation gear and computers – all significant downstream consumer sectors for chemicals and derivatives.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy