Preview: Due September 1 - U.S. August ISM Manufacturing - Still strong if a little less so
We expect modest slippage in August’s ISM manufacturing index to 55.0 from 55.6, a level that was the highest since May 2022. August’s level will remain above June’s 53.3 and keep every month in 2026 to date clearly positive, contrasting a 10-month string of negatives ending in December 2025.
Manufacturing is being supported by strong business investment, particularly in AI. Signals from other manufacturing surveys are mixed, with the Philly Fed’s exceptionally strong and the Empire State’s strong too. However the Richmond Fed’s was little changed and the S and P manufacturing PMI moved further off its recent high seen in May.
In the ISM manufacturing breakdown we expect new orders to signal underlying strength with a rise to 57.0 from 56.7. However we expect production to correct lower to a matching 57.0 from July’s very strong 58.5. Employment is also unlikely to match July’s reading of 52.8, its first positive since January 2025, but we expect it to remain healthy at 52.0. Inventories are likely to slip, we expect to 50.0 from 51.2, restrained by tougher seasonal adjustments.
The final component of the composite is delivery times, which Middle East-generated supply disruptions are likely to keep elevated, at 59.0 from 58.9. Prices paid do not contribute to the composite, but rising Middle East risks are likely to bring an increase, we expect to 75.0 from 71.1, while remaining below the recent high of 84.6 seen in April.
