Summary of August ISM Manufacturing, September 1, 2026

  • The ISM factory index fell to 54.6 from 55.6; new orders, down 3.0 points to 53.7, accounted for 0.6 of the drop.
  • Factory hiring was nearly balanced — 11.8% of firms added staff, 11.5% cut — before seasonal adjustment lifted the reading to 51.2.
  • The prices index held at 71.1; half of factories reported no change in input costs and only 4% reported decreases.
  • Waller tied his September vote to the inflation data due before the meeting — August CPI, September 11 — not to this report.

New orders accounted for most of the one-point drop

The ISM factory index — a count of how many factories are growing, not how fast — fell to 54.6 from 55.6, its eighth month above 50 after ten below (ISM, August Report On Business). Of five equal-weighted components, new orders fell 3.0 points to 53.7 and accounted for 0.6 of the 1.0-point decline; employment’s 1.6-point drop accounted for 0.3. Production eased 0.2 to 58.3 and materials lead times shortened from 87 to 84 days.

Before seasonal adjustment, 11.8% of factories added staff and 11.5% cut (ISM). S&P Global’s separate panel held at 53.9 and reported the fastest hiring of 2026 with output growth “the weakest since February” (S&P Global). The two panels agree on slower output and disagree on hiring and orders: S&P’s new orders were “little changed from July,” while ISM’s fell 3.0 points.

Half of factories now report no change in input costs

The prices index repeated July’s 71.1: 15 of 18 industries paid more for raw materials and none paid less (ISM). The share of factories reporting higher prices fell 4 points, to 46.2%, but the share reporting lower prices fell from 8.1% to 4.0%, and 49.8% — up from 41.7% — reported no change. The two shifts offset: four points fewer paying more, four points fewer paying less.

ISM again names steel and aluminum, tariffs, and petroleum (July ISM note). S&P Global’s panel read the same month as easing, with input-cost inflation at a five-month low. ISM counts how many firms pay more, not how much more, so both can be true: smaller increases at fewer factories, and decreases that have all but disappeared.

Waller’s vote turns on the September 11 CPI, not factory costs

The survey covers August, and ISM publishes no collection window; Iranian forces hit three tankers on August 30 and 31, and Brent rose 7.6% the week after (Sep 7 weekly). Fed Governor Christopher Waller said September 3 that his worry that higher energy prices would bleed into other goods and services prices “hasn’t come to pass, at least so far” (Fed) and tied his September vote to the inflation data due before the meeting.

Manufacturing is about a tenth of the economy, and the inflation still running above 2 percent is in services, not goods. The factory prices index has been at or above 70 for seven months, and core CPI slowed to 2.5% over 12 months in July, its smallest rise since February, through all of it (July CPI note). A second month at 71.1 means most factories are still paying more; it does not show those costs reaching consumers. The committee meets September 15–16, with August CPI due September 11.

Sources: ISM, August 2026 Manufacturing Report On Business — PMI 54.6; all sub-indexes, the higher/same/lower tables, industry counts, respondent comments, and lead times archived in the GeoMean data files, with the Jan 2024–Aug 2026 index history transcribed release-by-release (streak counts recomputed there). S&P Global, US Manufacturing PMI, August 2026 (release PDF archived; quoted phrases verbatim). Waller, September 3 speech (quoted phrase verbatim). Builds on the July ISM note, the July CPI note, and the September 7 weekly. No consensus figure is cited; none was verified. ISM is a diffusion index (50 = breakeven) and proprietary — not on FRED — so figures are from the ISM release.