The overall deterioration in business conditions was driven by a further decline in new orders. Lower new orders were blamed on a weakening economy and customers being cautious in placing new contracts. The rate of decline accelerated since July to register the second-steepest reduction seen over the past six months. Demand for US-produced goods has fallen 13 times in the past 15 months. Moreover, new export orders contracted for the fifteenth month running.
The latest reduction in new orders led firms to further reduce their levels of work-in-hand with backlogs declining for the eleventh month running, the second-longest sequence in the survey history. The latest depletion was strong, but not enough to sustain overall growth of output alongside falling new orders. Production fell for the second time in three months, albeit modestly. Since mid-2022 the Output Index has averaged 49.1, with eight monthly contractions outweighing six expansions. Also weighing on output in the latest period was a fifth successive reduction in finished goods inventories as companies sought to further manage stock levels lower, as per S&P Global.
US’ manufacturing sector’s struggles deepened in August 2023, with the PMI falling to 47.9, indicating a shrinking industry since November 2022, according to S&P Global.
New orders declined due to a weakening economy, affecting backlogs and production levels.
Output expectations hit a 2023 low, although employment rates increased modestly.
Output expectations eased notably since July with the future output index posting one of the biggest falls since the pandemic, leaving confidence at the lowest level in 2023 so far. Nevertheless, manufacturers continued to raise employment to support expected growth of workloads. Jobs have risen every month since August 2020, although the latest increase was the slowest since January.
Purchasing activity continued to fall sharply in August, contributing to another improvement in suppliers’ delivery times. Lead times have fallen for eight months in a row, the longest sequence in the survey history.
Weaker demand for inputs helped to contain cost pressures in August. Average input prices rose for the second month running, and at a slightly faster rate, but one that remained well below the long-run survey average. Anecdotal evidence highlighted oil, chemicals, plastics, and fuel as being up in price. Higher costs continued to be passed on to customers, as output prices rose at the fastest pace in four months albeit a pace that remained modest overall.
Fibre2Fashion News Desk (DP)
