US August ISM Manufacturing PMI remained in contraction despite rising prices

The US ISM manufacturing PMI for August was 47.2, up from 46.8 the previous month, but below the consensus of 47.5, reflecting a slower pace of industry contraction.

Components of the report showed that the price index advanced from 52.9 to 54.0, while the employment index also improved from 43.4 to 46.0. However, the overall decline was driven largely by another monthly decline in new orders as well as a decline in production.

Link to August US ISM Manufacturing PMI

“Demand continues to be weak, output has declined and inflows have remained accommodative,” said Timothy Fiore, chairman of the ISM Manufacturing Business Investigative Committee.

“Demand remains subdued as companies show a reluctance to invest in capital and inventory due to current federal monetary policy and election uncertainty.”

US Dollar vs. Major Currencies: 5 min

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The greenback, which had a mixed run until the release of the ISM manufacturing PMI report, was broadly higher after seeing slightly better-than-expected results.

The bullish dollar appeared to find some relief from rising employment and price components as the former brought positive vibes ahead of Friday’s NFP release.

The US currency managed to hold on to most of its post-PMI gains, except against the Loonie, as it moved sideways in the next few hours after the report.

The construction spending report released at the same time showed a month-on-month decline of 0.3% for July, instead of the expected 0.1% increase, while the RCM/TIPP consumer sentiment index, printed a few minutes later , showed little improvement.