August Manufacturing ISM Slightly Weaker Than Expected

The manufacturing ISM fell to 52.9 (consensus 53) from 53.9 in July. This is the lowest level for the index since March when it read 50.9. The Institute for Supply Management's index's decline suggests that manufacturers are trimming production and orders in expectation of softening sales due to the credit crunch. But with a reading of over 50, it indicates that manufacturing output continues to grow for the seventh month in a row. Growth was negative in January. A positive for inflation is that prices paid fell to 63, the lowest level since February, and the fourth month in a row of declines.

Production, employment, and new export orders showed growth, all other categories showed lower readings with most declining by around 2 points. New orders and order backlogs are both at their lowest levels since March.

These figures show deterioration from the second quarter, with negative implications for GDP growth in the third quarter.