Survey: US Manufacturing Declines In August

The U.S. manufacturing sector contracted last month for the first time since February, according to the latest Institute for Supply Management survey.

The August Manufacturing ISM Report On Business indicated a Purchasing Managers' Index of 49.4 percent, which was down 3.2 percentage points from July's total and fell under the 50 percent threshold that reflects manufacturing growth.

The report, based on a monthly poll of U.S. supply executives, also included a production index of 49.6 percent, a decline of 5.8 percentage points from the previous month and the lowest monthly reading in four years.

The index of new orders, meanwhile, slid by nearly 8 percentage points to 49.1 percent — the first contraction since the end of 2015. New export orders, however, grew for the sixth consecutive month as imports contracted for the first time in four.

The report's prices index remained above 50 percent for the sixth straight month despite a 2 percentage point decline, while the indexes for raw materials, customer inventories and order backlogs declined.

The employment index hit 48.3 percent, which was down 1.1 percentage points. Employment remained below 50 percent for all but one month in 2016.

Although the PMI indicated a drop in manufacturing production, it translated to growth in the broader economy for the 87th consecutive month.

"The past relationship between the PMI and the overall economy indicates that the average PMI for January through August ... corresponds to a 2.4 percent increase in real gross domestic product," Bradley Holcomb, who chairs the ISM's Manufacturing Business Survey Committee, said in a statement.