Manufacturing Down, Services Up in August

By SBE Council at 4 September, 2025, 5:21 pm

by Raymond J. Keating -

The Institute for Supply Management's manufacturing PMI pointed to continued contraction in manufacturing in the U.S., while the services PMI indicated growth in August.

As for manufacturing, the sector contracted for the sixth consecutive month in August, after two months of expansion in January and February of this year. Prior to that, manufacturing had contracted for 26 straight months. The manufacturing PMI registered 48.7 percent in August, which was higher than the 48 percent recorded in July. A reading of above 50 percent signals expansion, and below 50 percent contraction.

Manufacturing production, employment, exports and imports contracted, but new orders increased. Also, prices increased.

Industries Reporting Growth. As for the breakdown by industry, there were seven manufacturing industries reporting growth in August. Those include:

Textile Mills

Apparel, Leather & Allied Products

Nonmetallic Mineral Products

Food, Beverage & Tobacco Products

Petroleum & Coal Products

Miscellaneous Manufacturing

Primary Metals

10 Industries Reported Contraction:

Paper Products

Wood Products

Plastics & Rubber Products

Transportation Equipment

Furniture & Related Products

Machinery

Electrical Equipment

Appliances & Components

Computer & Electronic Products

Chemical Products

Fabricated Metal Products

Services PMI Continues Positive Trend. In contrast, the services PMI came in at 52 percent. This measure of the services sector has been positive for the past three straight months, and in 13 of the last 14 months. For good measure, August's 52 percent was the highest since February of this year. In August, 12 services sector reported growth, while only four indicated contraction.

Growth occurred in:

Information

Wholesale Trade

Arts, Entertainment & Recreation

Mining

Transportation & Warehousing

Educational Services

Professional, Scientific & Technical Services

Retail Trade

Utilities; Health Care & Social Assistance

Public Administration

Real Estate, Rental & Leasing

Those contracting include:

Accommodation & Food Services

Management of Companies & Support Services

Other Services

Construction

Among the problems highlighted were prices and tariffs.

Steve Miller, Chair of the Institute for Supply Management Services Business Survey Committee, noted, "The past relationship between the Services PMI and the overall economy indicates that the Services PMI for August (52 percent) corresponds to a 1.1-percentage point increase in real gross domestic product (GDP) on an annualized basis."

The services PMI being in positive territory is welcome, but when combined with the decline in the manufacturing PMI, this hardly points to strong economic growth.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. He is the author of " The Weekly Economist " book series, and 10 Points from Walt Disney on Entrepreneurship .