A reading on U.S. manufacturing activity saw a modest increase in the month of August but continued to indicate contraction, according to a report released by the Institute for Supply Management on Tuesday.
The ISM said its manufacturing PMI inched up to 47.2 in August from 46.8 in July, with a reading below 50 indicating contraction. Economists had expected the index to rise to 47.5.
The uptick by the headline index came as the employment index climbed to 46.0 in August from 43.4 in July, indicating a slower pace of contraction.
Meanwhile, the new orders slid to 44.6 in August from 47.4 in July and the production index fell to 44.8 in August from 45.9 in July.
Demand remains subdued, as companies show an unwillingness to invest in capital and inventory due to current federal monetary policy and election uncertainty, said Timothy R. Fiore, Chair of the ISM Manufacturing Business Survey Committee. Production execution was down compared to July, putting additional pressure on profitability.
The report also said the prices index rose to 54.0 in August from 52.9 in July, suggesting prices increased at a faster pace during the month.
On Thursday, the ISM is scheduled to release a separate report on U.S. service sector activity in the month of August.
The ISMs services PMI is expected to edge down to 51.1 in August from 51.4 in July, but a reading above 50 would still indicate growth.