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U.S. Manufacturing Contracts Again in August

Economists described the latest ISM index reading as 'sobering'


U.S. Manufacturing Contracts Again in August

Manufacturing, which had provided critical support for the U.S. economy since it emerged from recession in 2009, took another dip last month.

The Institute for Supply Management said on Tuesday that its factory index dropped to 49.6 in August.

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The reading disappointed economists, who were expecting the ISM index to come in at 50, Bloomberg noted. It also marked the third straight monthly reading below 50, signaling a continuing contraction in the manufacturing sector. It was the worst reading since July 2009.

In July, the ISM index posted a reading of 49.8. It registered an average monthly reading of 55.2 and 57.3 in 2011 and 2010, respectively.

The production component of the index tumbled from 51.3 in July, to 47.2 last month, its worst reading since May 2009. The index for new orders fell from 48 in July, to 47.1 in August.

Export demand, however, increased slightly to a reading of 47, up from 46.5 in July.

The ISM’s factory employment index fell from 52 in July, to 51.6 last month.

ISM economists called the August index reading “sobering” and indicated that they saw no suggestion that the manufacturing sector will improve anytime soon.

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