Source: Manufacturing Dive
Date: 2nd September 2025

PMI shows slight gains in new orders, but production and broader industry contraction weigh on growth.

U.S. manufacturing activity remained flat in August despite an uptick in new orders, according to the Institute for Supply Management’s latest Purchasing Managers’ Index.

The index registered 48.7%, signalling contraction, while production fell 3.6 percentage points, nearly cancelling out the gains from new demand. Although new orders expanded for the first time in six months, most other demand indicators, including export orders and backlogs, remained in decline.

Industry participants reported that tariff uncertainty is the biggest factor holding back recovery.

Many manufacturers are delaying hiring or scaling back operations as they await clarity on future trade policies.

Roughly 69% of the manufacturing sector’s gross domestic product is currently in contraction, and nearly nine out of ten companies surveyed cited tariffs as a major concern.

Legal challenges to recent tariff policies are adding to the unpredictability, with courts reviewing whether the administration’s measures are valid.

Meanwhile, alternative measures offered a slightly more positive outlook.

S&P Global’s Manufacturing PMI rose to 53% in August, its strongest performance since May 2022, buoyed by stronger orders and increased inventory building.

However, rising input costs are being passed through to customers, raising the possibility of higher consumer price inflation in the months ahead.