Last month we noted that the PMI needs to hold steady or move a bit higher to be consistent with our forecast for a modest economic recovery.
Looking under the hood, the PMI data for August weren’t quite as dire as they first appear. This largely rests on the PMI new orders index, which lifted to its highest level in three years at 55.2.
It is important to remember that any recovery will be off a very weak base. Indeed, four of the five PMI sub-indices are still below their long-run average.
Core manufacturing sales volumes (excluding meat and dairy) fell 1.9% q/q in Q2 2025. This was consistent with earlier PMI readings which slumped to 47.6 during that period.
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