August U.S. ISM Business Sentiment Index Shows Tariff Costs Pressuring Employment, Rush to Avoid Further Cost Increases

August ISM Indices Show Tariff Impact on Employment The Institute for Supply Management (ISM) released manufacturing and non-manufacturing business sentiment indices on September 2 and 4 respectively. The manufacturing index improved 0.7 points to 48.7 but remained below the 50 benchmark. Employment (43.8) was the largest negative factor, with production (47.8) and inventory (49.4) also below benchmark. New orders (51.4) exceeded the benchmark for the first time in 7 months, though "for every positive comment about new orders, there were 2.5 comments expressing concerns about short-term demand primarily due to tariff costs and uncertainty." Corporate Commentary Reflects Tariff Burden Corporate comments included: "Two price increases totaling 24% only offset tariff costs. Two rounds of layoffs reduced U.S. employees by 15%. Capital investment and hiring are frozen" (electrical equipment). The non-manufacturing index improved significantly to 52, potentially reflecting "moves to prepare for holiday season peak demand while getting ahead of further price increases." This data illustrates how tariff policies are directly impacting employment and business investment decisions across U.S. manufacturing sectors.