TEMPE, Ariz. — September 2, 2025 — Economic activity in the manufacturing sector contracted in August for the sixth consecutive month, following a two-month expansion preceded by 26 straight months of contraction, say the nation’s supply executives in the latest ISM® Manufacturing PMI® Report.

The report was issued today by Susan Spence, MBA, Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee.

“The Manufacturing PMI registered 48.7 percent in August, a 0.7-percentage point increase compared to the 48 percent recorded in July. The overall economy continued in expansion for the 64th month after one month of contraction in April 2020. (A Manufacturing PMI above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy.) The New Orders Index indicated growth in August following a six-month period of contraction; the figure of 51.4 percent is 4.3 percentage points higher than the 47.1 percent recorded in July. The August reading of the Production Index (47.8 percent) is 3.6 percentage points lower than July’s figure of 51.4 percent. The Prices Index remained in expansion (or ‘increasing’) territory, registering 63.7 percent, down 1.1 percentage points compared to the reading of 64.8 percent reported in July. The Backlog of Orders Index registered 44.7 percent, down 2.1 percentage points compared to the 46.8 percent recorded in July. The Employment Index registered 43.8 percent, up 0.4 percentage point from July’s figure of 43.4 percent.

“The Supplier Deliveries Index indicated slower delivery performance after one month in ‘faster’ territory, which was preceded by seven consecutive months in expansion (or ‘slower’) territory. The reading of 51.3 percent is up 2 percentage points from the 49.3 percent recorded in July. (Supplier Deliveries is the only ISM PMI Reports index that is inversed; a reading of above 50 percent indicates slower deliveries, which is typical as the economy improves and customer demand increases.) The Inventories Index registered 49.4 percent, up 0.5 percentage point compared to July’s reading of 48.9 percent.

“The New Export Orders Index reading of 47.6 percent is 1.5 percentage points higher than the reading of 46.1 percent registered in July. The Imports Index registered 46 percent, 1.6 percentage points lower than July’s reading of 47.6 percent.”

Spence continues, “In August, U.S. manufacturing activity contracted at a slightly slower rate, with new orders growth the biggest factor in the 0.7-percentage point gain of the Manufacturing PMI. However, since production contracted at a rate nearly equal to the expansion in new orders, the Manufacturing PMI increase was nominal.

“Two of the four demand indicators improved, with the New Orders and New Export Orders indexes showing gains, while the Customers’ Inventories and Backlog of Orders indexes contracted at slightly faster rates. A ‘too low’ status for the Customers’ Inventories Index is usually considered positive for future production.

“Regarding output, the Production Index returned to contraction and the Employment Index edged up slightly, as panelists indicated that managing head counts is still the norm at their companies, as opposed to hiring.

“Finally, inputs (defined as supplier deliveries, inventories, prices and imports), on net, declined further into contraction territory. The Inventories Index improved slightly but is still in contraction territory, the Supplier Deliveries Index indicated slower deliveries, and prices continued to increase, but at a slower rate. The Imports Index moved further into contraction.

“Looking at the manufacturing economy, 69 percent of the sector’s gross domestic product (GDP) contracted in August, down from 79 percent in July. Four percent of GDP is strongly contracting (registering a composite PMI® of 45 percent or lower), down from 31 percent in July. The share of sector GDP with a PMI® at or below 45 percent is a good metric to gauge overall manufacturing weakness. Of the six largest manufacturing industries, two (Food, Beverage & Tobacco Products; and Petroleum & Coal Products) expanded in August, compared to none in July,” says Spence.

The seven manufacturing industries reporting growth in August — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Miscellaneous Manufacturing; and Primary Metals. The 10 industries reporting contraction in August — in the following order — are: Paper Products; Wood Products; Plastics & Rubber Products; Transportation Equipment; Furniture & Related Products; Machinery; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Chemical Products; and Fabricated Metal Products.

What Respondents Are Saying

“A 50-percent tariff on imports from Brazil, combined with the U.S. Department of Agriculture’s elimination of the specialty sugar quota, means certified organic cane sugar — and everything made with it — is about to get significantly more expensive.” (Food, Beverage & Tobacco Products)

“Orders across most product lines have decreased. Financial expectations for the rest of 2025 have been reduced. Too much uncertainty for us and our customers regarding tariffs and the U.S./global economy.” (Chemical Products)

“Tariffs continue to be unstable, with suppliers adding surcharges ranging between 2.6 percent to 50 percent.” (Petroleum & Coal Products)

“Tariffs continue to wreak havoc on planning/scheduling activities. New product development costs continue to increase as unexpected tariff increases are announced — for example, 50-percent duties on imports from India, and increases to all countries up from original 10 percent. Our materials/supplies are now rising in price, so our sell pricing is again being reviewed to ensure we keep a sustainable margin. Plans to bring production back into U.S. are impacted by higher material costs, making it more difficult to justify the return.” (Computer & Electronic Products)

“The construction industry, especially home building, is still at a lower level. With new construction at a low level, our new sales are impacted. We are mainly now relying on replacement business. Cost of goods sold is higher due to tariff-impacted goods.” (Machinery)

“Domestic sales remain flat but are down four percent from plan by unit volume [tariff pricing]. Export demand is falling as customers do not accept tariff impacts, which likely will require some production transfers out of the U.S. Supplier deliveries remain consistent with ocean shipping costs dropping significantly. Tariff costs have biggest financial impact but also costs of copper and of steel products.” (Fabricated Metal Products)

“The trucking industry continues to contract. Our backlog continues to shrink as customers continue to hold off on buying new equipment. This current environment is much worse than the Great Recession of 2008-09. There is absolutely no activity in the transportation equipment industry. This is 100 percent attributable to current tariff policy and the uncertainty it has created. We are also in stagflation: Prices are up due to material tariffs, but volume is way off.” (Transportation Equipment)

“Very tentative domestic market, with home building and remodeling not very active at all. Inflation, among other factors, is starting to impact consumer buying power, leading to negative signs for our order files. International markets are upended due to the unpredictability of on-again, off-again tariff activity.” (Wood Products)

“We’ve implemented our second price increase. ‘Made in the USA’ has become even more difficult due to tariffs on many components. Total price increases so far: 24 percent; that will only offset tariffs. No influence on margin percentage, which will actually drop. In two rounds of layoffs, we have let go of about 15 percent of our U.S. workforce. These are high-paying and high-skilled roles: engineers, marketing, design teams, finance, IT and operations. The administration wants manufacturing jobs in the U.S., but we are losing higher-skilled and higher-paying roles. With no stability in trade and economics, capital expenditures spending and hiring are frozen. It’s survival.” (Electrical Equipment, Appliances & Components)

“There is still uncertainty in the construction market. Large expansions or investment are hampered by the unknown of costing and the economy. The markets we operate in can be strong short term, but there is an underlying feeling that has you questioning for how long.” (Nonmetallic Mineral Products)

ISM® Manufacturing PMI® Report data is seasonally adjusted for the New Orders, Production, Employment and Inventories indexes.
*Number of months moving in current direction.

Commodities Reported Up/Down In Price And In Short Supply

Commodities Up in Price
Aluminum (21); Brass; Copper (2); Copper Products (2); Electrical Components (7); Steel* (7); Steel — Stainless (6); and Steel Products* (6).

Commodities Down in Price
Corn (2); Natural Gas (2); Plastic Resins; Soybean Meal (2); Steel*; and Steel Products*.

Commodities in Short Supply
Electrical Components (2); and Electronic Components (6).

Note: The number of consecutive months the commodity is listed is indicated after each item.
*Indicates both up and down in price.

August 2025 Manufacturing Index Summaries

Manufacturing PMI®
The U.S. manufacturing sector contracted in August for the sixth consecutive month after two months of expansion preceded by 26 months of contraction. “The Manufacturing PMI® registered 48.7 percent, 0.7 percentage point higher compared to the 48 percent reported in July. Of the five subindexes that directly factor into the Manufacturing PMI, two (New Orders and Supplier Deliveries) are in expansion territory, up from one in July. After two months in expansion territory, the Production Index lost 3.6 percentage points, putting it back in contraction. The Employment Index increased slightly but remains in contraction territory, and the Inventories Index had a slower rate of contraction. Two of the six biggest manufacturing industries (Food, Beverage & Tobacco Products; and Petroleum & Coal Products) registered growth in August,” says Spence. A reading above 50 percent indicates that the manufacturing sector is generally expanding; below 50 percent indicates that it is generally contracting.

A Manufacturing PMI above 42.3 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the August Manufacturing PMI indicates the overall economy grew for the 64th straight month after contracting in April 2020. “The past relationship between the Manufacturing PMI and the overall economy indicates that the August reading (48.7 percent) corresponds to a change of plus 1.8 percent in real gross domestic product (GDP) on an annualized basis,” says Spence.

The Last 12 Months

New Orders
ISM’s New Orders Index expanded in August for the first time after six consecutive months of contraction, registering 51.4 percent, an increase of 4.3 percentage points compared to July’s figure of 47.1 percent. This reading is above the 12-month moving average (48.8 percent) for the New Orders Index, which hasn’t indicated consistent growth since a 24-month streak of expansion ended in May 2022. “Of the six largest manufacturing sectors, two (Food, Beverage & Tobacco Products; and Computer & Electronic Products) reported increased new orders. Despite the index’s move into expansion territory, for every positive comment about new orders, there were 2.5 comments expressing concern about near-term demand, primarily driven by tariff costs and uncertainty,” says Spence. A New Orders Index above 52.1 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

The eight manufacturing industries that reported growth in new orders in August — in the following order — are: Apparel, Leather & Allied Products; Textile Mills; Primary Metals; Food, Beverage & Tobacco Products; Computer & Electronic Products; Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; and Miscellaneous Manufacturing. The six industries reporting a decline in new orders in August, in order, are: Paper Products; Wood Products; Plastics & Rubber Products; Fabricated Metal Products; Transportation Equipment; and Machinery.

Production
The Production Index landed in contraction territory for the first time since May (following two months of expansion), registering 47.8 percent, 3.6 percentage points lower than the July reading of 51.4 percent. “Of the six largest manufacturing sectors, one (Food, Beverage & Tobacco Products) reported increased production. Panelists had a 1-to-1.8 ratio of positive to negative comments regarding output,” says Spence. An index above 52.1 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The six industries reporting growth in production during the month of August — in the following order — are: Nonmetallic Mineral Products; Textile Mills; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Fabricated Metal Products; and Miscellaneous Manufacturing. The six industries reporting a decrease in production in August, in order, are: Wood Products; Paper Products; Furniture & Related Products; Transportation Equipment; Plastics & Rubber Products; and Chemical Products. Six industries indicated no change in production levels in August as compared to July.

Employment
ISM’s Employment Index registered 43.8 percent in August, 0.4 percentage point higher than July’s reading of 43.4 percent. “The index posted its seventh consecutive month of contraction after expanding in January, with seven straight months of contraction before that. Since May 2022, the Employment Index has contracted in 33 of 40 months. Of the six big manufacturing sectors, none reported higher levels of employment in August. For every comment on hiring, there were four on reducing head count as companies continued to focus on accelerating staff reductions due to uncertain near- to mid-term demand. Layoffs and not filling open positions remain the main head-count management strategies,” says Spence. An Employment Index above 50.3 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, two reported employment growth in August: Nonmetallic Mineral Products; and Plastics & Rubber Products. The 13 industries reporting a decrease in employment in August, in the following order, are: Apparel, Leather & Allied Products; Wood Products; Paper Products; Electrical Equipment, Appliances & Components; Textile Mills; Computer & Electronic Products; Furniture & Related Products; Transportation Equipment; Chemical Products; Primary Metals; Machinery; Food, Beverage & Tobacco Products; and Fabricated Metal Products.

Supplier Deliveries†
Delivery performance of suppliers to manufacturing organizations was slower in August, after one month of faster deliveries preceded by seven months of index readings in “slowing” territory. The Supplier Deliveries Index registered 51.3 percent, a 2-percentage point increase compared to the reading of 49.3 percent reported in July. Of the six big industries, two (Computer & Electronic Products; and Chemical Products) reported slower supplier deliveries. “The findings in August could suggest that supply chain performance is slowing due to demand increasing in the form of new orders,” says Spence. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The 10 manufacturing industries reporting slower supplier deliveries in August — in the following order — are: Textile Mills; Wood Products; Furniture & Related Products; Nonmetallic Mineral Products; Primary Metals; Electrical Equipment, Appliances & Components; Computer & Electronic Products; Fabricated Metal Products; Chemical Products; and Miscellaneous Manufacturing. The three industries reporting faster supplier deliveries in August are: Paper Products; Plastics & Rubber Products; and Machinery.

Inventories
The Inventories Index registered 49.4 percent in August, up 0.5 percentage point compared to the reading of 48.9 percent in July. “Of the six big industries, three (Petroleum & Coal Products; Transportation Equipment; and Food, Beverage & Tobacco Products) expanded in August,” says Spence. An Inventories Index greater than 44.5 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

Of 18 manufacturing industries, the six reporting higher inventories in August — listed in order — are: Apparel, Leather & Allied Products; Textile Mills; Petroleum & Coal Products; Transportation Equipment; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. The seven industries reporting lower inventories in August — listed in order — are: Electrical Equipment, Appliances & Components; Primary Metals; Nonmetallic Mineral Products; Computer & Electronic Products; Plastics & Rubber Products; Machinery; and Chemical Products.

Customers’ Inventories†
ISM’s Customers’ Inventories Index remained in “too low” territory in August, with a reading of 44.6 percent, a decrease of 1.1 percentage points compared to the reading of 45.7 percent in July. “Customers’ inventory levels in August continued to contract and move further from ‘about right’ territory,” says Spence (For more information about the Customers’ Inventories Index, see the “Data and Method of Presentation” section below).

The two industries reporting customers’ inventories as too high in August are: Computer & Electronic Products; and Furniture & Related Products. The 12 industries reporting customers’ inventories as too low in August, in order, are: Primary Metals; Paper Products; Textile Mills; Machinery; Fabricated Metal Products; Chemical Products; Transportation Equipment; Food, Beverage & Tobacco Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Wood Products; and Nonmetallic Mineral Products.

Prices†
The ISM Prices Index registered 63.7 percent in August, decreasing 1.1 percentage points compared to the previous month’s reading of 64.8 percent, indicating raw materials prices increased for the 11th straight month (though at a slower rate compared to July). The Prices Index has increased 11.2 percentage points over the past nine months. In the last six months, the index reached its highest levels since June 2022, when it registered 78.5 percent. All of the six largest manufacturing industries — Machinery; Food, Beverage & Tobacco Products; Computer & Electronic Products; Petroleum & Coal Products; Transportation Equipment; and Chemical Products, in that order — reported price increases in August. “The Prices Index reading continues to be driven by increases in steel and aluminum prices that impact the entire value chain, as well as tariffs applied to many imported goods. Higher prices were reported by 33.5 percent of respondents in August, down from 35.4 percent in July. The share of respondents reporting higher prices trended up from November 2024 (12.2 percent) to April (49.2 percent), which was the highest level since June 2022 (65.2 percent),” says Spence. A Prices Index above 52.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

In August, the 15 industries that reported paying increased prices for raw materials, in order, are: Textile Mills; Wood Products; Primary Metals; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Miscellaneous Manufacturing; Machinery; Paper Products; Food, Beverage & Tobacco Products; Computer & Electronic Products; Petroleum & Coal Products; Transportation Equipment; Furniture & Related Products; Fabricated Metal Products; and Chemical Products. No industries reported paying decreased prices for raw materials in August.

Backlog of Orders†
ISM’s Backlog of Orders Index registered 44.7 percent, a decrease of 2.1 percentage points compared to the July reading of 46.8 percent, indicating order backlogs contracted for the 35th consecutive month after a 27-month period of expansion that ended September 2022. Of the six largest manufacturing industries, none reported expansion in order backlogs in August. “As we have been reporting, ongoing contraction in the Backlog of Orders index means that trade issues and other geopolitical tensions are still at play. Significant improvement shouldn’t be expected until those issues begin to recede,” says Spence.

Of the 18 manufacturing industries, the two that reported growth in order backlogs in August are: Textile Mills; and Primary Metals. The 12 industries reporting lower backlogs in August — in the following order — are: Wood Products; Plastics & Rubber Products; Paper Products; Furniture & Related Products; Machinery; Computer & Electronic Products; Nonmetallic Mineral Products; Fabricated Metal Products; Food, Beverage & Tobacco Products; Chemical Products; Electrical Equipment, Appliances & Components; and Transportation Equipment.

New Export Orders†
ISM’s New Export Orders Index contracted in August, registering 47.6 percent, up 1.5 percentage points from July’s reading of 46.1 percent. “Export orders contracted for the sixth consecutive month after growing in January and February. That brief period of expansion followed an ‘unchanged’ status (a reading of 50 percent), preceded by six straight months of contraction. The continued contraction of new export orders still indicates the effect of the ongoing trade friction and resulting dampened demand,” says Spence.

Of the 18 manufacturing industries, three industries reported growth in new export orders in August: Nonmetallic Mineral Products; Electrical Equipment, Appliances & Components; and Machinery. The eight industries reporting a decrease in new export orders in August — in the following order — are: Wood Products; Apparel, Leather & Allied Products; Paper Products; Fabricated Metal Products; Primary Metals; Plastics & Rubber Products; Miscellaneous Manufacturing; and Chemical Products. Seven industries reported no change in new export orders in August.

Imports†
ISM’s Imports Index remained in contraction for the fifth month in August after expanding for three straight months. The August figure of 46 percent is a decrease of 1.6 percentage points compared to the reading of 47.6 percent reported in July. “Imports are contracting at a faster rate, indicating lower levels of demand due to tariff pricing,” says Spence.

The four industries reporting an increase in import volumes in August are: Apparel, Leather & Allied Products; Nonmetallic Mineral Products; Plastics & Rubber Products; and Miscellaneous Manufacturing. The 10 industries that reported lower volumes of imports in August — in the following order — are: Wood Products; Textile Mills; Paper Products; Electrical Equipment, Appliances & Components; Primary Metals; Furniture & Related Products; Machinery; Chemical Products; Transportation Equipment; and Computer & Electronic Products.

†The Supplier Deliveries, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders, and Imports indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy
The average commitment lead time for Capital Expenditures in August was 173 days, the same as July. The average lead time in August for Production Materials was 84 days, a decrease of one day compared to July. The average lead time for Maintenance, Repair and Operating (MRO) Supplies was 48 days, an increase of four days compared to July.

Posted: September 2, 2025

Source: Institute for Supply Management