The Institute for Supply Management (ISM) has released its monthly Purchasing Managers Index (PMI) for August, and the story told is another positive one with the PMI at 58.8%, an increase from the July reading of 56.3%.
A reading above 50% indicates the manufacturing economy is generally expanding; below 50% indicates it is generally contracting.
A PMI above 50%, over a period of time, generally indicates an expansion of the overall economy. Therefore, the August PMI indicates growth for the 99th consecutive month in the overall economy, and indicates growth in the manufacturing sector for the 12th consecutive month — the highest reading since April 2011, when the index registered 59.1%.
“Comments from the panel reflect expanding business conditions, with new orders, production, employment, backlog and exports all growing in August, as well as supplier deliveries slowing (improving) and inventories increasing during the period,” said Timothy R. Fiore, chairman of the ISM Manufacturing Business Survey Committee. “The Customers’ Inventories Index experienced a sharp decline in August compared to July.”
The New Orders Index registered 60.3%, a slight decrease from the July reading of 60.4%. The Production Index registered 61%, a 0.4 percentage point increase compared to the July reading of 60.6%. The Employment Index registered 59.9%, an increase from the July reading of 55.2%. The Supplier Deliveries Index registered 57.1%, an increase from the July reading of 55.4%. The Inventories Index registered 55.5%, an increase from the July reading of 50%. The Prices Index registered 62% in August, the same reading as July, indicating higher raw materials’ prices for the 18th consecutive month.
Of the 18 manufacturing industries, 14 reported growth in August, in the following order: Textile Mills; Petroleum & Coal Products; Machinery; Transportation Equipment; Fabricated Metal Products; Computer and Electronic Products; Paper Products; Electrical Equipment, Appliances and Components; Miscellaneous Manufacturing; Chemical Products; Nonmetallic Mineral Products; Plastics and Rubber Products; Printing and Related Support Activities; and Food, Beverage & Tobacco Products.
Three industries reported contraction in August compared to July: Apparel, Leather & Allied Products; Primary Metals; and Furniture and Related Products.
Further commentary and the full report are available at this link.