American industry shows signs of deeper downturn amidst rising costs

The latest business indicators reveal a deepening downturn in the American industrial sector. According to the Institute for Supply Management, "the ISM manufacturing index rose to 47.2 points in August from 46.8 points in July; however, it remains below the threshold of 50 points, signaling a contraction in activity in this sector."

PKO BP published a report on this. Analysts point out that "companies have cut production due to weak inflows of new orders and decreasing levels of backlogged orders." Additionally, "businesses continued to reduce employment through layoffs and hiring freezes."

The S&P Global PMI index shows an even worse sentiment. According to a report from this institution, "the PMI for the US industry fell to 47.9 points in August from 49.6 points in July, indicating that the condition of the industrial sector worsened for the second month in a row."

A worrying signal is the increasing cost pressure in the American industry. According to the ISM report, "prices have risen for the sixth month in a row." Meanwhile, according to S&P Global, "production cost inflation reached its highest level in 16 months, which, combined with demand problems, intensifies concerns about the future condition of the sector."

Experts emphasize that "the manufacturing sector is facing challenges such as low demand amid still significant cost pressures, for example, in terms of raw material prices." This situation "may signal an economic cooling in the face of the still restrictive Fed policy."

Analysts expect the Fed's policy "should soon be eased, which could support the sector." However, for now, business sentiment remains pessimistic—according to ISM, "they are at the lowest level since the pandemic."