TEMPE, AZ – Economic activity in the manufacturing sector expanded in August for the 25th consecutive month, says the Institute for Supply Management.

The August PMI fell a slight 0.3 percentage point to 50.6%. New orders were 49.6%, up 0.4 percentage point. Production dropped 3.7 points to 48.6%, and inventories rose 3 points to 52.3%. Customer inventories were up 2.5 points to 46.5%, while backlogs increased 1 percentage point to 46%.

“The PMI registered 50.6%, a decrease of 0.3 percentage point from July, indicating expansion in the manufacturing sector for the 25th consecutive month, at a slightly slower rate. The production index registered 48.6%, indicating contraction for the first time since May of 2009, when it registered 45%. The new orders and backlog of orders indexes edged up slightly from July, but both indexes are indicating contraction in August at slower rates than in July. The rate of increase in prices slowed for the fourth consecutive month, dropping another 3.5 percentage points in August to 55.5%. The overall sentiment is one of concern and caution over the domestic and international economic environment, which is affecting customers' confidence and willingness to place orders, at least in the short term,” said Bradley J. Holcomb, chair of ISM.

The overall economy grew for the 27th consecutive month, the firm says.