The Institute for Supply Management reports that the headline PMI figure from its manufacturing report on business was a reading of 55.7 in August. This is a slight increase from the 55.4 reading in July, and indicates economic expansion in the manufacturing sector (reading >50). This is also the highest the index has been since June 2011.

ISM Manufacturing

Recall that all 5 leading manufacturing surveys conducted by Federal Reserve banks are indicating expansion.

The August PMI figure was brought up mainly by increases in new orders. 4 of the 5 leading diffusion indexes from ISM now suggest economic expansion in the manufacturing sector:

  • New Orders: 63.2 from 58.3 last month.
  • Production: 62.4 from 65.0 last month.
  • Employment: 53.3 from 54.4 last month.
  • Deliveries: 52.3 from 52.1 last month.
  • Inventories: 47.5 from 47.0 last month.

ISM Manufacturing Components August 20131 600x375 ISM Manufacturing Ticks Up To 55.7

ISM Manufacturing Table August 2013 600x241 ISM Manufacturing Ticks Up To 55.7

Performance by industry:

Of the 18 manufacturing industries, 15 are reporting growth in August in the following order: Textile Mills; Wood Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Nonmetallic Mineral Products; Plastics & Rubber Products; Computer & Electronic Products; Printing & Related Support Activities; Furniture & Related Products; Primary Metals; Fabricated Metal Products; Transportation Equipment; Machinery; Chemical Products; and Paper Products. The only industry reporting contraction in August is Miscellaneous Manufacturing.

What the respondents are saying:

  • “Slight improvements in both domestic and international sales.” (Fabricated Metal Products)
  • “Business is slowing down, not sure why — but we may end up below last year’s sales levels, whereas we had forecast 6.5 percent growth.” (Miscellaneous Manufacturing)
  • “Material prices continue to be favorable; business is steady.” (Paper Products)
  • “Slowing down slightly, but still stronger than last year by 20 percent.” (Furniture & Related Products)
  • “Military slowdown affecting business.” (Computer & Electronic Products)
  • “Summer seasonal businesses are doing well after a late start.” (Printing & Related Support Activities)
  • “Still not seeing the year we had expected. Cautious about the balance of 2013.” (Machinery)
  • “Tight government spending still affecting business.” (Transportation Equipment)
  • “With improved weather outlook in the central states, agricultural prices are relaxing year over year.” (Food, Beverage & Tobacco Products)
  • “We have benefitted from the Yen; seeing a 20 percent decrease in material costs from 2012 to 2013.” (Chemical Products)

Via: floatingpath.com