The US manufacturing index for August is 47.9, 1.7 points less than July (49.6) and 0.1 point below the flash estimate and consensus, both 48. This marks the second consecutive month the US manufacturing index is below the 50-growth threshold, which indicates that the industry is contracting.

August's decline is partly due to lower sales. In some cases, clients showed reluctance to commit to new projects due to a slowdown in market demand. There was also a decline in employment midway through the third quarter with staffing levels decreasing for the first time in 2024.

The rate of input cost inflation reached a 16-month high, well above the pre-Covid average. Due to the higher costs of labor, shipping and raw materials output prices also increased at a faster pace, albeit still the second slowest in 2024.

Firms remain confident that output will increase over the coming year, with some expecting demand to return to normal following the presidential election.

The final manufacturing PMI for August is expected to come in at 48.0, unchanged from the flash and 49.6 in July.

Based on monthly questionnaire surveys of selected companies, the Purchasing Managers' Manufacturing Index (PMI) offers an advance indication on month-to-month activity in the private sector economy by tracking changes in variables such as production, new orders, stock levels, employment and prices across manufacturing industries. The final index for the current month is released roughly a week after the flash.

Investors need to keep their fingers on the pulse of the economy because it dictates how various types of investments will perform. By tracking economic data such as the ISM manufacturing index in the U.S. and the Markit PMIs in the U.S. and elsewhere, investors will know what the economic backdrop is for the various markets. The stock market likes to see healthy economic growth because that translates to higher corporate profits. The bond market prefers less rapid growth and is extremely sensitive to whether the economy is growing too quickly and causing potential inflationary pressures.

The Markit PMI manufacturing data give a detailed look at the manufacturing sector, how busy it is and where things are headed. Since the manufacturing sector is a major source of cyclical variability in the economy, this report has a big influence on the markets. And its sub-indexes provide a picture of orders, output, employment and prices.

Markit originally began collecting monthly Purchasing Managers' Index (PMI) data in the U.S. in April 2004, initially from a panel of manufacturers in the U.S. electronics goods producing sector. In May 2007, Markit's U.S. PMI research was extended out to cover producers of metal goods. In October 2009, Markit's U.S. Manufacturing PMI survey panel was extended further to cover all areas of U.S. manufacturing activity. Back data for Markit's U.S. Manufacturing PMI between May 2007 and September 2009 are an aggregation of data collected from producers of electronic goods and metal goods producers, while data from October 2009 are based on data collected from a panel representing the entire U.S. manufacturing economy. Markit's total U.S. Manufacturing PMI survey panel comprises over 600 companies.