US manufacturing activity continued to contract in August, according to survey data released for the ISM Manufacturing Index. The benchmark ticked higher last month but reflected contraction for the fifth straight month and for the 21st time in the last 22 months. The report also showed that manufacturers continue to pay higher prices for inputs. “Input price pressures moved up modestly to the highest in three months, but they are not so high in our judgment to threaten continued slow disinflation,” says Conrad DeQuadros, senior economic advisor at Brean Capital. “No bar to a September rate cut here but nothing to push the Fed to a half-point cut either.”

PMI survey data for the Eurozone published today indicates that the currency bloc’s private sector economy “expanded at its strongest pace since May during August, driven by a quicker upturn in services activity.” The PMI report adds that “Although this marked a sixth successive month of growth – the longest sequence in over two years – underlying survey data nevertheless highlighted economic fragility across the euro area as new orders, employment and business confidence deteriorated.”
China’s service economy continued to expand in August, based on survey data via Caixin China General Services PMI. “Incoming new business and activity remained in growth, with export business rising at an accelerated rate in August,” the report advises.
US construction spending unexpectedly fell in July, marking the first monthly decline since October 2022. The drop weighed on the year-over-year trend, reducing the annual pace to 6.7% vs. 7.2% in June — the slowest growth since July 2023.
The US stock market has recently become more sensitive to payrolls data and less sensitive to consumer inflation figures, according to analysis from BofA Global Research. The jobs report has “regained its crown as the most important data release for stocks,” BofA analysts wrote earlier this week. “All eyes will be on the August payrolls report” scheduled for this Friday (Sep. 6), they advise.