US manufacturing activity contracted in August, but the rate of contraction was slower than in July, the Institute for Supply Management reported today.

Its Manufacturing PMI edged up to a reading of 47.2% in August from 46.8% in July. Readings below 50% indicate a contraction.

“After breaking a 16-month streak of contraction by expanding in March, the manufacturing sector has contracted the last five months but at a slower rate in August,” Timothy Fiore, chair of the ISM’s manufacturing business survey committee, said in a press release.

Fiore also noted demand continues to be weak and companies are unwilling to invest in capital and inventory because of uncertainty over federal monetary policy and the upcoming election.

The employment index component of the Manufacturing PMI also continues to indicate contraction, though at a slower pace. Its August reading was 46.0% compared to July’s 43.4%.

“Of the six big manufacturing sectors, only ‘food, beverage & tobacco products’ expanded employment in August, primarily due to seasonality factors,” Fiore said. “Respondents’ companies are continuing to reduce head counts through layoffs, attrition and hiring freezes.”

The full report is available online.