US factory activity expands for an eighth month, but new orders slow

US manufacturing expanded for the eighth month in a row in August 2026, but more slowly. The Institute for Supply Management's Manufacturing PMI fell to 54.6 from 55.6 in July. A reading above 50 means more purchasing managers reported growth than contraction.

The details

• New orders: 53.7, down 3.0 points
• Production: 58.3, down 0.2
• Employment: 51.2, down 1.6
• Supplier deliveries: 59.3, up 0.4 (a higher reading means slower deliveries)
• Inventories: 50.6, down 0.6
• Prices: 71.1, unchanged
• Backlog of orders: 51.8, down 3.2
• New export orders: 53.2, up 0.2
• Imports: 52.5, down 3.2

Fifteen manufacturing industries reported growth.

Prices remain the pressure point

A prices index above 70 means a large majority of purchasing managers are paying more. ISM linked the increases to higher steel and aluminium prices under Section 232 tariffs, tariffs applied to many imported goods, and petroleum-based products made more expensive by the Middle East conflict. Among respondents' negative comments, 57% mentioned pricing volatility, 46% longer lead times, 30% the Iran war and 29% tariffs.

Susan Spence, who chairs ISM's Manufacturing Business Survey Committee, said that based on its past relationship with the economy, the August reading corresponds to annualized real GDP growth of about 2.4%.

Why it matters for the dollar

Solid activity with persistent price pressure keeps the Federal Reserve focused on inflation. The Fed announces its decision on 16 September (what currency traders are watching). The services survey, which covers most of the US economy, was stronger still (ISM services). For how these surveys work, see PMIs explained.