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ISM® PMI® Reports Roundup: August Manufacturing

September 02, 2025
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By Dan Zeiger
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The monthly suite of economic data from Institute for Supply Management® has a new name — the ISM® PMI® Reports, formerly the ISM® Report On Business® — but troubling trends remained the same in August, at least for U.S. factories.

Tariffs-inducing indigestion, demand worries, employment reductions and high prices were again dominant themes of the ISM® Manufacturing PMI® Report. The composite index reading of 48.7 percent was an increase compared to the previous month, buoyed by the New Orders Index moving into expansion territory — but any excitement was muted by indications that was more of a blip than a sign of sustained demand growth.

The share of manufacturing gross domestic product (GDP) in contraction was 69 percent, down from 79 percent in July but still an alarmingly high number. Survey respondents’ comments sentiment continues to be pessimistic, by record-wide margins — in August, there were 15 negative general comments for each positive one. The submissions were especially compelling, if not biting, on tariffs.

Add it all up, and the near- to mid-term fortunes for the manufacturing sector are no less hazy than they were in April or May, said Susan Spence, MBA, Chair of the ISM Manufacturing Business Survey Committee. “In recent months, some industries have gone into expansion, but that never holds,” she told a conference call of reporters. “I don’t see a consistent pattern on anything, except prices.”

Trade-policy uncertainties have left companies running in place or even hesitant to move due to the unpredictability of input prices, Spence said. Last week, a U.S. appeals court ruled that President Donald Trump has overstepped his authority to bypass Congress and impose his sweeping tariffs, but did not strike them down.

The legality figures to be settled by the Supreme Court, but continuing shifts in tariffs and timelines could mean more buying inertia, especially with companies increasingly indicating that that can no longer absorb input price increases. Eighty-nine percent of panelists’ comments on tariffs could be classified as “worrisome,” Spence said.

“With no stability in trade and economics, capital expenditures spending and hiring are frozen. It’s survival,” wrote a panelist in Electrical Equipment, Appliances & Components. An example of mixed messages companies are contending with: On the same July day the White House announced new duties on Japan, South Korea and 12 other countries, those plans were “not 100 percent firm,” Trump told reporters.

Spence said, “We’re in unprecedented times. If trade policies were consistent one way or the other, perhaps people would make decisions and be comfortable with them. At this point, any sense of relief is going to be short-lived. Not knowing what’s going to happen is only going to drive uncertainty.”

That uncertainty has been evident in ISM’s Manufacturing data for months, Spence said, and other indicators have followed. On that note, the Employment and Prices indexes provided little to get excited about.

The Employment Index registered 43.8 percent, a seventh straight month of contraction as the ratio of panelists’ comments was 4-to-1 on head-count reductions versus adding workers. The Prices Index was in expansion (or “increasing”) territory for the 11th month in a row, with a reading of 63.7 percent.

The New Orders Index reading of 51.4 percent, a 4.3-percentage point gain compared to the previous month, might have been a product of somewhat forced reordering, Spence said. The Customers’ Inventories Index registered 44.6 percent, indicating less product on shelves. But the Backlog of Orders (44.7 percent) and New Export Orders (47.6 percent) didn’t suggest a groundswell of demand.

“Customers are hesitating to order because they don’t want to take the increase of the tariffs, but at some point you have to reorder,” Spence said. “But depending on the industry, you could see consumers going into austerity. Will they hunker down? If so, that will create a ripple effect that industries will feel.”

The ISM® PMI® Reports roundup:

Bloomberg: U.S. Manufacturing Activity Contracted in August for a Sixth Month. The mixed report highlights the number of crosscurrents facing the nation’s producers. While still experiencing higher costs as a result of hikes in import duties, manufacturers are still benefiting from solid business investment and resilient household demand.

CNBC: ISM Manufacturing Remains in Contraction Territory. “On this very important week in which we'll get two employment reports (ADP private payrolls and the federal jobs data), the Employment Index comes in at 43.8 percent,” analyst Rick Santelli said. He added, “So, we see that we are not doing well, as this is the seventh consecutive month in contraction territory.”

Manufacturing Dive: August Manufacturing Activity Flat as Tariff Uncertainty Looms. “In general, Spence said that for every positive comment, there are 15 negative ones. While some companies struggle with hiring, Spence said more comments are coming in that suggest employers are not replacing people who have either left or been laid off, or closing factories.”

MarketWatch: ‘Tariffs Continue to be Unstable’: Manufacturing Contracts for Sixth Month in a Row, ISM Finds. “The U.S. stock market has rallied to new highs, but the economy has not followed suit. Businesses are still adjusting to higher tariffs, even as negotiations with some large countries are ongoing. … A pending reduction in interest rates this month by the Federal Reserve could help a bit, but it won’t be a game changer.”

Reuters: U.S. Manufacturing Mired in Weakness; AI Spending Boom Helps Some Factories. “Lengthening delivery times meant prices paid by factories for inputs remained elevated. The (Prices Index) slipped to a still-high 63.7 percent, from 64.8 percent in July. The high reading supports economists’ contention that goods prices will accelerate in the second half of 2025.”

The Wall Street Journal: Factory Activity Shrinks for Sixth Month; Tariffs Remain a Key Worry. “An improvement in new orders was the biggest factor in the small increase. Employment readings also edged higher. Of the six largest manufacturing industries, two — food and beverage products, and petroleum and coal products — expanded in August, compared with none in July.”

The ISM® Services PMI® Report will be unveiled on Thursday, and the ISM® Hospital PMI® Report on Monday. For the most up-to-date content on the ISM® PMI® Reports, use #ISMPMI on X, formerly known as Twitter.

(Photo credit: Getty Images/Drazen)

About the Author

Dan Zeiger

About the Author

Dan Zeiger is Senior Copy Editor/Writer for Inside Supply Management® magazine, covering topics, trends and issues relating to supply chain management.