The US manufacturing sector continued to show signs of strain in August, as the Manufacturing Purchasing Managers’ Index (PMI) slipped to an eight-month low of 48.0 points, according to flash estimates from S&P Global.
This decline follows a reading of 49.6 points in July, marking the second consecutive month of contraction in factory activity. The downturn is largely attributed to weaker demand conditions, tight financial conditions, and elevated price pressures that have weighed heavily on the manufacturing sector.
In contrast, the Services PMI painted a more optimistic picture, rising slightly to 55.2 points from July’s 55.0 points. The increase was driven by higher new orders and the growth of new businesses, indicating resilience in the services sector despite broader economic challenges.
The overall Composite PMI, which combines both manufacturing and services data, moderated to 54.1 points from 54.3 points in July, marking its lowest level in four months.
Despite the manufacturing slowdown, analysts remain cautiously optimistic about the near-term outlook for US private business activity. Improved business confidence, dovish signals from the Federal Open Market Committee (FOMC), and increased spending related to pre-election activities are expected to support continued expansion in the services sector.
However, rising living costs, particularly due to elevated energy prices, could pose a downside risk to this positive outlook. The mixed signals from the PMI data underscore the complex economic landscape facing the US as it navigates a period of uncertainty and heightened inflationary pressures.
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