US manufacturing activity, as measured by the Institute for Supply Management (ISM) index, grew in August for the first time in the past one-and-a-half years, led by a big jump in new orders.
The ISM, a grade group of purchasing managers, said Tuesday its index rose to 52.9 in August, from 48.90 in July. It is the first reading above 50, which indicates expansion, since January 2008, and is the highest number the index has reached since 2007.
Norbert J. Ore, chair of the ISM, commented, "The year-and-a-half decline in manufacturing output has come to an end, as 11 of 18 manufacturing industries are reporting growth when comparing August to July. While this is certainly a positive occurrence, we have to keep in mind that it is the beginning of a new cycle and that all industries are not yet participating in the growth. The August index of 52.9 percent is the highest since June 2007. The 4 percentage point increase was driven by significant strength in the New Orders Index, which is up 9.6 points to 64.9 percent, the highest since December 2004. The growth appears sustainable in the short term, as inventories have been reduced for 40 consecutive months and supply chains will have to re-stock to meet this new demand."
Figures from the report are as follows:
|
| Series | Series | % |
| Rate |
|
|---|---|---|---|---|---|---|
| PMI | 52.9 | 48.9 | +4.0 | Growing | From Contracting | 1 |
| New Orders | 64.9 | 55.3 | +9.6 | Growing | Faster | 2 |
| Production | 61.9 | 57.9 | +4.0 | Growing | Faster | 3 |
| Employment | 46.4 | 45.6 | +0.8 | Contracting | Slower | 13 |
| Supplier Deliveries | 57.1 | 52.0 | +5.1 | Slowing | Faster | 3 |
| Inventories | 34.4 | 33.5 | +0.9 | Contracting | Slower | 40 |
| Customers' Inventories | 39.0 | 42.5 | -3.5 | Too Low | Faster | 5 |
| Prices | 65.0 | 55.0 | +10.0 | Increasing | Faster | 2 |
| Backlog of Orders | 52.5 | 50.0 | +2.5 | Growing | From Unchanged | 1 |
| Exports | 55.5 | 50.5 | +5.0 | Growing | Faster | 2 |
| Imports | 49.5 | 50.0 | -0.5 | Contracting | From Unchanged | 1 |
| OVERALL ECONOMY | Growing | Faster | 4 | |||
| Manufacturing Sector | Growing | From Contracting | 1 | |||
*Number of months moving in current direction