The Econoday factory sector activity index (EFSAI)* for August is 18.4 after a small dip to 16.6 in July. The reading indicates that manufacturing continued to expand at a modest pace in the past three months, adding to a generally firming trend for 2026 to date.
Three of the six district bank surveys of manufacturing that make up the EFSAI index rose noticeably (New York, Philadelphia, and Dallas) and one edged slightly higher (Kansas City). Two surveys reflected softer conditions although the decline was negligible for one (Richmond) and trending lower in the other (Chicago).
The ongoing conflict in the Middle East may be boosting some defense production. If so, it has not been broadly stimulative for manufacturing yet.
The Econoday factory sector prices paid index (EFSPPI)# is essentially unchanged at 41.0 in August from 41.1 in July. Upward price pressures brought on by the war on Iran may have eased but the current plateau suggests that further improvement will be slow to come.
The Econoday factory sector employment index (EFSEI)## points to ongoing hiring by manufacturers. The August index of 8.6 above 7.5 in July and 8.1 in June. This index has not seen three temperate but solid readings since late 2022. There could be an increase in manufacturing payrolls in the monthly employment report for August at 8:30 ET on Friday, September 4.
The EFSAI has strong correlations** with the major national indexes for activity in the factory sector. It indicates that August should experience narrow expansion in manufacturing in the national indicators.
The S&P manufacturing purchasing managers index had a flash reading of 53.2 for August after 53.9 in July. This points to little change in conditions in August from July and that activity since June has leveled off, restrained in part by economic uncertainty. The S&P final manufacturing index for August is set for release at 9:45 ET on Tuesday, September 1. The Econoday consensus forecast is 53.2 for August.
The ISM manufacturing index was up to 55.6 in July from 53.3 June. The EFSAI hints that the ISM measure for August will be a bit higher than in July, but this does not change the overall picture for cautious expansion in manufacturing. The ISM manufacturing index for August is set for release at 10:00 ET on Tuesday, September 1. The Econoday consensus forecast is 55.2 for August.
*The EFSAI is an average of seasonally adjusted indexes from the Federal Reserve district bank surveys of manufacturing that includes smoothing for month-to-month volatility. The districts correspond with about 48 percent of the US labor force. An index above 0 indicates expanding activity and below 0 indicates contracting activity.
**S&P PMI for manufacturing correlation 0.805, ISM manufacturing 0.882.
#The EFSPPI is an average of unadjusted indexes from the Federal Reserve district bank surveys of manufacturing. The EFSPPI has a correlation of 0.858 with the ISM manufacturing prices paid index.
##The EFSEI is an average of seasonally adjusted indexes from the Federal Reserve district bank surveys of manufacturing. The EFSEI has a correlation of 0.668 with the ISM manufacturing employment index.
