The Federal Reserve’s Fifth District manufacturing index slipped to 4 in August 2026 from 5 in July, coming in below market expectations of 7. Overall manufacturing activity was broadly stable: shipments rose to 11 from 8, but new orders eased to 3 from 5.
Signs of softening demand emerged as backlogs of orders dropped into negative territory (-7 vs 4), and capital expenditures also turned negative (-5 vs 0). Employment weakened, falling to -2 from 2, indicating a modest contraction in factory payrolls.
Price pressures picked up slightly. The average growth rate of prices paid increased to 6.22 from 6.08, while the growth rate of prices received edged up to 4.09 from 3.96. At the same time, the local business conditions index declined to 4 from 10 in July, pointing to a more cautious assessment of current conditions.
Looking ahead six months, firms remained generally optimistic. Expectations for new orders inched up to 32 from 31, though shipment expectations eased to 26 from 33. Employment expectations strengthened, rising to 20 from 15. Anticipated growth in both prices paid and prices received moderated, suggesting some relief from cost and pricing pressures. However, the future local business conditions index continued its downward trend, slipping to 16 from 19, indicating a more tempered outlook despite overall positive expectations.
