United States manufacturing activity accelerates in August: ISM

United States manufacturing activity accelerates in August: ISM

United States manufacturing activity accelerates in August: ISM

Manufacturing activity in the US reached a six-year high in August, with factories continuing to register a big rise in sales and boosting hiring in response.

The ISM reading is known as a diffusion index, which means it is a survey of purchasing managers who describe their businesses in terms of expansion or contraction.

The new-orders index dipped just 0.1 point to 60.3%, the production index rose slightly to 61%, and the employment index vaulted 4.7 points to 59.9% - the best since June 2011. That's the highest reading since April 2011! On a y/y basis, the only component that declined was Customer Inventories.

The prices paid subcomponent remained stable at 62, broadening the gap from year-ago levels to 9 points from 7 points earlier. A measure of exports slipped but continued to indicate growth.

"It was a really, really strong number", Timothy Fiore, chair of ISM's Manufacturing Business Survey Committee, said on a conference call. Eight industries reported growth while only two of the eighteen reported a decrease in new export orders. Out of 18 industries, 14 recorded growth in August, with Textile Mills, Petroleum & Coal Products, and Machinery registering the most solid growth on the month.

"Overall, we remain optimistic about manufacturing's prospects over the medium term, given improving global growth and a weaker USA dollar - with the greenback giving back more than its post-election gains", added TD Economics.