US Manufacturing PMI Moderates to 54.6 in August as Freight Pressures Persist

United States manufacturing activity sustained its expansionary trajectory for an eighth consecutive month in August, though the pace of growth moderated from the previous month. The Institute for Supply Management recorded a headline manufacturing PMI of 54.6, down 1.0 percentage point from the July peak, which had marked the highest level since May 2022. The reading fell short of economists' expectations of 55.2 but remained well above the 50-point threshold separating expansion from contraction. According to survey data, the current performance level corresponds to an annualized real GDP expansion rate of 2.4 percent.

Underlying demand indicators showed signs of deceleration following strong mid-summer activity. The new orders index registered 53.7, reflecting a 3.0-point decrease compared to July, while remaining in positive territory for an eighth straight month. Order backlogs also softened, declining by 3.2 points to 51.8 against a robust production reading of 58.3. Market analysts noted that some of the sequential cooling in order volume may stem from companies having accelerated inventory procurement earlier in the summer ahead of tariff implementations.

Customer inventory levels remained compressed despite modest replenishment during the month. The customers' inventories subindex climbed 2.1 points to 42.8, holding in territory designated as too low. Meanwhile, manufacturing employment remained in growth territory at 51.2 following a return to expansion in July that ended a 33-month contractionary period. The relative scarcity of client inventories continues to provide an underlying baseline of support for ongoing industrial output.

Logistics and delivery networks continued to register strain across industrial supply channels. The Logistics Managers' Index indicated ongoing tightness with a transportation capacity reading of 40, representing contraction even as the rate of tightening slowed by 11.6 points from July. In parallel, the ISM supplier deliveries subindex rose 40 basis points to 59.3, pointing to slower delivery speeds for a ninth consecutive month. None of the 14 surveyed manufacturing sectors reported faster delivery intervals in August compared to the prior month.

Input cost inflation remained a prominent headwind for industrial operators during the period. The prices index held steady at 71.1, matching July and signaling an increase in raw materials pricing for the 23rd consecutive month. While the share of respondents reporting higher input costs decreased 4.0 percentage points to 46.2 percent, pricing volatility drove negative sentiment among 58 percent of surveyed supply managers. The health of the manufacturing sector remains critical for freight markets, as industrial volumes generate approximately two-thirds of revenue for less-than-truckload motor carriers.