US manufacturing PMI weakens in August, companies signal softer growth in new work

Goods producers in the US witnessed a further improvement in overall business conditions in August. However, the pace of rebound was slower than in July. Output in August continued to increase noticeably, but total new work grew at a slower rate. The seasonally adjusted Markit Flash US Manufacturing Purchasing Managers’ Index dropped to 52.1 in August from July’s 52.9.

A further strong growth in output was the most positive influence on the latest PMI reading, stated Markit. On the contrary, decelerating growth in total new work and employment, along with additional reduction in inventories, had declined the overall headline figure.

Manufacturers in the US hinted at increased output for the third straight month in August. Moreover, the pace of growth continued to be strong overall, after rising slightly from July to a nine-month high. Firmer underlying demand, new product launches and new marketing strategies are expected to have underpinned production growth in August.

Even if strong output growth was sustained, total new orders rose at a slower rate in the month. According to data, relatively weak domestic demand led to softer growth in overall new work. Meanwhile, employment in manufacturing rose just a tad in August. It was the softest pace of payroll growth seen in four months. At the same time, other companies noted that overall jobs growth was weighed on by attempts to increase efficiency.

Survey data of August showed an additional increase in purchasing activity that was usually attributed to larger amounts of incoming new work, stated Markit. However, consistent with the new orders’ trend, the pace of growth decelerated since July.

The pace of input price inflation was the weakest in the current five-month sequence of rising costs. Prices charged for US manufactured goods remained the same in August, thus ending the three month sequence of increase.