ISM Manufacturing PMI — August 2025
Headline: The Manufacturing PMI rose to 48.7 from 48.0 in July, but remained in contraction for a sixth consecutive month. The reading was below its trailing six-month average of 48.9, within the prior six-month range of 48.0–50.3. Manufacturing remained below its 50.0 breakeven, while the broader economy was still growing: 48.7 was above the overall-economy breakeven of 42.3.
Sub-indices:
| Index | Level | Prior | Change | Direction | vs 6-mo. |
|---|---|---|---|---|---|
| New Orders | 51.4 | 47.1 | 4.3 | Growing | 6-mo high |
| Production | 47.8 | 51.4 | -3.6 | Contracting | below avg (48.3) |
| Employment | 43.8 | 43.4 | 0.4 | Contracting | below avg (45.7) |
| Supplier Deliveries | 51.3 | 49.3 | 2.0 | Slowing | below avg (53.8) |
| Inventories | 49.4 | 48.9 | 0.5 | Contracting | below avg (49.8) |
| Customers' Inventories | 44.6 | 45.7 | -1.1 | Too Low | below avg (45.9) |
| Prices | 63.7 | 64.8 | -1.1 | Increasing | below avg (67.6) |
| Backlog of Orders | 44.7 | 46.8 | -2.1 | Contracting | below avg (45.5) |
| New Export Orders | 47.6 | 46.1 | 1.5 | Contracting | above avg (46.1) |
| Imports | 46.0 | 47.6 | -1.6 | Contracting | below avg (47.4) |
Key moves:
- New Orders jumped 4.3 points to 51.4, a six-month high and a return to growth after five months below 50.
- Production fell 3.6 points to 47.8, reversing two months of expansion and moving back below 50.
- Backlog of Orders declined to 44.7, below its six-month average and extending its contraction streak to 35 months.
Insights:
- The demand signal improved materially, but the output response did not: New Orders crossed above 50 while Production fell below it. This divergence points to a possible lag between incoming demand and current factory activity.
- Manufacturers’ inventories remained in contraction at 49.4 despite a modest increase. With New Orders rising sharply rather than falling, the movement does not point clearly to an involuntary inventory buildup; it may reflect preparation for firmer near-term demand.
- Customers’ Inventories fell to 44.6, an 11-month run at “too low.” As an inverse indicator, this is supportive of future orders and production as customers replenish, although the persistently weak backlog provides an important counterweight.
- Supplier Deliveries moved above 50 to 51.3, indicating slower deliveries. In combination with stronger New Orders, this is consistent with firmer demand and/or some supply tightness, though the reading remains below its six-month average.
- Employment edged up 0.4 point but remained deeply contractionary at 43.8, extending the contraction to seven months. Input-cost pressure also remained elevated: Prices were 63.7, indicating rising costs despite a slower pace and a level below the six-month average.
Breadth & prices: Seven industries reported growth and none were listed as contracting. Input prices continued to increase, with the Prices index at 63.7, albeit down from 64.8.
Takeaway: August showed an encouraging rebound in forward demand, but it has not yet translated into production, hiring, or backlog stabilization. The six-month manufacturing contraction therefore appears to be moderating at the order-entry stage, while weak output and employment keep the near-term industrial outlook subdued.