US August ISM manufacturing PMI 47.6 vs 47.0 expected

• Prior report 46.4
• Prices paid 48.4 vs 43.9 expected. Last month 42.6
• Employment 48.5 vs 44.2 expected. Last month 44.4
• New orders 46.8 vs 47.3 prior

Manufacturing has been in a recession for some time but there are some green shoots. I suspect this survey is going to be a mess for the next few months because it looks like an autoworkers strike is coming.

Bonds are selling off on this report, in part because of the jump in prices paid. I don’t think that should have been a surprise given energy prices.

Comments in the ISM report:

• “Further reductions in customer orders due to the economic situation
  and also their working down of own inventories. Backlog is dwindling,
  but still showing robust revenue.” [Computer & Electronic Products]
• “Demand still weak. Customer inventories are getting depleted;
  however, we are not seeing a real uptick in demand. General supply
  conditions are softening.” [Chemical Products]
• “Still seeing a slowdown in orders. We’re continuing to ship to max
  capacity, with supply constraints still a real part of our day-to-day
  business operations.” [Transportation Equipment]
• “Customer orders have softened. This is likely due to customers’
  increased confidence in the supply chain, (which) has them reducing
  their inventories. Customers are also being pinched with higher interest
  rates. Additionally, consumers are feeling their purchasing power
  eroded by stubbornly high inflation, so they are purchasing less.”
  [Food, Beverage & Tobacco Products]
• “Fourth quarter orders falling short of projection and indicating a
  slowdown in customer demand, though the first quarter forecast remains
  solid. Unclear if this is an inventory correction. Logistics stabilized
  and costs are matching 2019. Shortages limited to only a few items now,
  but suppliers are hesitant to add or replace labor needed in light of
  slowing demand.” [Fabricated Metal Products]
• “General slowdown in business at the end of the third quarter. For
  capital equipment additions, our customers are buying only what they
  need for specific jobs and not adding any capital fleet material for
  potential future work.” [Machinery]
• “There is additional softening in the market. Customers are hesitant
  to provide extended forecasts with today’s economic uncertainty.”
  [Electrical Equipment, Appliances & Components]
• “Business continues to remain strong with sales and profits both
  ahead of plan. The bookings were below what we planned, but that was
  expected due to fewer working days and summer vacations.” [Miscellaneous
  Manufacturing]
• “The manufacturing sector continues to be slow, and the low market
  prices make it difficult to stay profitable. On the positive side,
  laborers are showing enthusiastic employment interest. Rising energy and
  fuel prices are of concern to our company.” [Paper Products]
• “Business is beginning to improve moderately. Still well below 2022
  levels, but it appears that the ‘great inventory rebalancing’ is finally
  coming to fruition.” [Plastics & Rubber Products]
• “Automotive volume remains strong in preparation for the United Auto
  Workers’ potential strike at Ford, General Motors and Stellantis.
  Contingency plans in place for sub-tiers. Continue to have issues
  recruiting general labor employees. Operational efficiency suffering due
  to a lack of human resources. Order book remains strong and ahead of
  2022.” [Primary Metals]
• “(The Federal Reserve’s) actions to increase borrowing costs has
  dampened demand for residential investment. Recently, this slowdown
  plateaued somewhat, with demand stabilizing. The outlook for 2024
  remains uncertain, and we continue to be cautious about building
  inventories.” [Wood Products]

The inventories metric is an interesting one as it makes new lows: