The S&P Global Manufacturing Purchasing Managers’ Index (PMI) fell to 47.6 in August from 49.8 in July. The August result was the worst reading since July 2020. As such, the index fell below the 50.0 no-change threshold, indicating a sharp deterioration in business conditions in the private sector compared to the previous month.
The PMI plunged deeper into contraction territory in August was driven by production and new orders contracting at the fastest pace since June 2020. This was due to the deterioration of the domestic and global outlook in recent months. More positively, weak demand appears to be easing pressure on supply capacity, with slower delivery times and backlog and input-output inflation in August. Moreover, employment levels stabilized after three months of decline.
Osama Bhatti of S&P Global said:
“Forecasts for production over the next year waned in August as concern grew that the economic slowdown might deepen among manufacturers, while companies also pointed to the continuing impact of inflation and the war in Ukraine. As a result, positive sentiment slipped to its lowest level since October of the year. Past “.
FocusEconomics panel members see the economy growing by 2.6% in 2022, unchanged from last month’s forecast. For 2023, they see the economy growing by 2.1%.