Furniture manufacturing reported a drop in new orders in June.
TEMPE, Ariz. – The U.S. manufacturing sector is still the weakest it has been since the early days of the pandemic. The Institute for Supply Management’s August index reading came in at 52.8%, a tie from last month when it hit its lowest point since June 2020.
Compared with July, manufacturers recorded a 3% decrease in production and a 7.5% decline in consumer prices (its lowest reading since June 2020). The sector also recorded a 3.3% increase in new orders and a 4.4% increase in employment, a return to expansion.
“The U.S. manufacturing sector continues expanding at rates similar to the prior two months,” said ISM chairman Timothy R. Fiore. “New order rates returned to expansion levels, supplier deliveries remain at appropriate tension levels and prices softened again, reflecting movement toward supply/demand balance.
“Prices expansion eased dramatically in August, which — when coupled with lead times easing — should bring buyers back into the market, improving new order levels,” Fiore said. “Sentiment remained optimistic regarding demand, with five positive growth comments for every cautious comment. Panelists continue to express unease about a softening economy, with 18% of comments noting concern about order book contraction. Twelve percent of panelists’ comments reflect growing worries about total supply chain inventory.”
Once again, furniture performed poorly compared with the other 17 manufacturing industries recognized by the ISM. Furniture and wood products saw the two biggest declines in new orders and were just two of three to report that customers’ inventories are too high. Furniture was one of eight to report paying more for raw materials than it did in July.
On the positive side, furniture and wood products led in faster supplier deliveries compared with June, when it also improved from May. The industry reported lower backlogs and no change in production or employment from July, perhaps a good sign as both metrics declined significantly in May.
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