Today the Institute for Supply Management released its August 2011 manufacturing report for the U.S., which showed that economic activity in the manufacturing sector expanded in August for the 25th consecutive month, and the overall economy grew for the 27th consecutive month. However, the purchasing managers index, or PMI, registered slowing growth, down 0.3 percent from July to 50.6 percent. Anything below 50 would be a contraction. The Production Index fell to 48.6 percent, indicating the first contraction since May of 2009, the height of the recession, when it registered at 45 percent.
While the New Orders Index came in at 49.2 in July, its first contraction since June 2009, it improved slightly in August to 49.6, though still showing a contraction. The rate at which prices have increased slowed for the fourth consecutive month, dropping 3.5 percentage points in August to 55.5 percent. After four months of decline, the Price Index has fallen from 85.5 to 55.5, a 30 point decline since April. Low consumer confidence, especially in the month of August, with the S&P downgrade and the huge market sell-off, has had a lot to do with the decrease in new orders, as well as the backlog of orders, which also contracted in August, though less so than in July.
Of the 18 manufacturing industries, as categorized by the Institute for Supply Management, 10 reported growth in August, with Wood Products doing the best, followed by Petroleum & Coal Products, Miscellaneous Manufacturing, Food, Beverage & Tobacco Products, Fabricated Metal Products, Paper Products, Transportation Equipment, Chemical Products, Computer & Electronic Products, and Machinery. The six industries reporting contraction in August, listed in order are: Plastics & Rubber Products; Textile Mills; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; Apparel, Leather & Allied Products; and Primary Metals.