The contraction in manufacturing sector eased in August, fueled by record spending on new plants in July.
The data adds to signals that the manufacturing sector is nearing a bottom and that a rebound is not too far away.
The manufacturing purchasing managers’ index rose to 47.6 in August, up from 46.4, but remained under the 48.7 that is considered neither an expansion or contraction, the Institute of Supply Management reported on Friday.
Read more of RSM’s insights on manufacturing and the middle market.
In a separate report released Friday, construction spending on manufacturing sites rose by 1.1% in July after briefly contracting by 0.5% in June, while the sector added a whooping 16,000 net jobs in August, according to the Bureau of Labor Statistics.
For the economy overall, however, the wildcard is consumer spending and how it will hold up in the last quarter of the year after a robust summer.
Manufacturing tailwinds
Manufacturing, though, could be poised for a rebound. With interest rates at or near their peak, the rate-sensitive manufacturing sector will be bolstered by robust spending on infrastructure and semiconductor plants.
Underneath the top-line number, prices paid—a proxy for manufacturing inflation—contracted at a slower pace as the PMI index rose to 48.4 from 42.6.
The inventory index reached a recent low at 44.0 as businesses continued to work down their stocks. New orders also contracted at a slightly faster rate. The subindex fell to 46.8 from 47.3.
