TEMPE, Ariz. – Over the past few months, the overall U.S. manufacturing sector has reported declines, but furniture in particular had been a standout highlight, reporting growth for three months in a row. In August, that growth appears to have stalled.
The Institute for Supply Management’s August report measured the manufacturing sector at 47.6%, indicating contraction for the 10th consecutive month but at a 1.2% slower rate than it did in July. The sector remains in a slightly better position than its low point in May 2020, when it recorded one of its poorest performances ever at 43.1%.
“The U.S. manufacturing sector shrank again, but the uptick in the index indicates a slower rate of contraction,” said Timothy R. Fiore, ISM chairman. “The August composite index reading reflects companies managing outputs appropriately as order softness continues, but the month-over-month increase is a sign of improvement.
“New orders shrank at a slightly faster rate, new export orders continued in contraction territory with minimal signs of improvement, and order backlog improved for the third straight month but remains at low levels,” he continued. “Panelists’ companies stabilized production compared to July and continued to manage head counts, primarily through attrition.
“Production execution is consistent with new, reduced output levels based on panelists’ companies order books. Suppliers continue to have capacity. Prices are generally stable. Sixty-two percent of manufacturing GDP contracted in August, down from 92% in July, a positive trend for the economy,” he said.
Just five of the 18 manufacturing industries recognized by the ISM reported growth, with the remaining 13 contracting. After three months of being a positive outlier, furniture saw a decline in August.
Furniture reported no change in new orders for the month, as well as in production output and employment. Last month, it was one of just four to report an increase in new orders. Furniture was one of 11 industries to report lower inventories. It was one of seven to report that customers’ inventories are too high. It was one of 10 to report paying less for raw materials, and one of nine to report lower volumes of imports.
Furniture saw the biggest order backlog increase of any industry.