Economic activity in the manufacturing sector contracted in August for the third time since July 2009. However, the overall economy grew for the 39th consecutive month, according to the latest Manufacturing ISM Report On Business.

The PMI registered 49.6%, a decrease of 0.2 percentage point from July’s reading of 49.8%, indicating contraction in the manufacturing sector for the third consecutive month. This is also the lowest reading for the PMI since July 2009, according to Bradley J. Holcomb, chair of the Institute for Supply Management Manufacturing Business Survey Committee.

A reading above 50% indicates that the manufacturing economy is generally expanding; below 50% indicates that it is generally contracting.

The New Orders Index registered 47.1%, a decrease of 0.9 percentage point from July, indicating contraction in new orders for the third consecutive month. The Production Index registered 47.2%, a decrease of 4.1 percentage points and indicating contraction in production for the first time since May 2009. The Employment Index remained in growth territory at 51.6%, but registered its lowest reading since November 2009 when the Employment Index registered 51%. The Prices Index increased 14.5 percentage points from its July reading to 54%. Comments from the panel generally reflect a slowdown in orders and demand, with continuing concern over the uncertain state of global economies.”

Of the 18 manufacturing industries, eight are reporting growth in August in the following order: Printing & Related Support Activities; Primary Metals; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Apparel, Leather & Allied Products; Paper Products; Chemical Products; and Miscellaneous Manufacturing.

The eight industries reporting contraction in August – listed in order – are: Textile Mills; Nonmetallic Mineral Products; Furniture & Related Products; Computer & Electronic Products; Electrical Equipment, Appliances & Components; Transportation Equipment; Fabricated Metal Products; and Machinery.

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