U.S. manufacturing activity experienced a slight uptick in August, though it remained in a state of contraction, according to a report by the Institute for Supply Management (ISM) released on Tuesday.
The ISM's manufacturing Purchasing Managers' Index (PMI) edged up to 47.2 in August from 46.8 in July. A reading below 50 signals contraction. Economists had anticipated a rise to 47.5.
The modest increase in the headline index was driven by the employment index, which improved to 46.0 in August from 43.4 in July, indicating a deceleration in the rate of contraction.
Conversely, the new orders index declined to 44.6 in August from 47.4 in July, and the production index dropped to 44.8 from 45.9 over the same period.
"Demand remains subdued as companies hesitate to invest in capital and inventory due to current federal monetary policies and election uncertainty," stated Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee. "Production levels decreased compared to July, further straining profitability."
The report also noted that the prices index increased to 54.0 in August from 52.9 in July, indicating a faster pace of price increases during the month.
On Thursday, ISM is set to release a separate report on U.S. service sector activity for August. The services PMI is projected to decrease marginally to 51.1 in August from 51.4 in July, though a reading above 50 would still denote growth.
