US Manufacturing Activity Slows Amid Tariffs and Rising Costs

US manufacturing activity slowed in August, according to the Institute for Supply Management's (ISM) survey. The ISM Manufacturing PMI fell to 54.6 from 55.6 in July, which was the highest reading since May 2022.

The survey noted that manufacturers cited tariffs, the Middle East conflict, and rising steel and aluminum costs as major concerns for profitability. AI-related demand continued to support factory growth but also contributed to higher prices for electronics and semiconductors.

Despite the slowdown, the labor market remains stable, with 1.05 job openings for every unemployed person in July, up from 1.01 in June. This has increased expectations that the Federal Reserve could raise interest rates as soon as this month to fight inflation.