US manufacturing shows mixed momentum in recent factory order and PMI data

United States industrial production and factory orders have shown conflicting trends across recent months. In July, factory orders experienced a strong rebound, rising 0.9% month-over-month, which exceeded expectations. This represented the best monthly increase since April, with core factory orders also rising 0.6% month-over-month.

However, data for August indicates a loss of momentum in the manufacturing sector. The Institute for Supply Management reported that the manufacturing PMI declined to 54.6 from a July high of 55.6. This slowdown is attributed to a decrease in the front-loading of orders, a strategy previously used by companies to mitigate price increases and scarcity.

New orders also saw a decline, dropping from 56.7 to 53.7. Despite these challenges, the sector continues to receive support from investments in artificial intelligence and expectations of future growth as companies begin to replenish inventories that have been shrinking for five consecutive quarters.