Source: Manufacturing Dive
Date: 2nd September 2025

Production dips despite a rebound in new orders, highlighting the pressure of policy and pricing uncertainty.

U.S. manufacturing activity showed little movement in August, with overall growth tempered by tariff uncertainties.

The Purchasing Managers’ Index registered 48.7%, signalling continued contraction in the sector. While new orders rose for the first time in six months, climbing to 51.4%, production fell by 3.6 percentage points to 47.8%, effectively offsetting the gains.

Key demand indicators such as export orders, backlog, and customer inventories also remained in contraction.

Industry representatives stressed that tariff instability remains the most significant drag on growth, with the majority of companies citing it as a major concern.

Many manufacturers are hesitant to expand production or rehire staff, with some even resorting to factory closures.

Analysts noted that nearly 70% of manufacturing GDP is currently in contraction, underscoring the scale of the challenge facing the sector. Legal battles over the validity of recent tariffs have further fuelled uncertainty, leaving businesses unclear about future input costs and profit margins.

In contrast, S&P Global’s Manufacturing PMI painted a more positive picture, rising to 53% in August. This improvement was attributed to increased new orders, inventory building, and hiring, marking the strongest operating conditions since mid-2022.

However, the gains were accompanied by widespread cost increases being passed to customers, raising questions about the potential impact on consumer inflation in the months ahead.