ISM: Manufacturing Surges Ahead

Economic activity in the manufacturing sector is at its highest levels since June 2011, say the nation’s supply executives in the latest Manufacturing Institute for Supply Management (ISM) Report On Business. A surge in production and new orders in July gives growth momentum to the sector.

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Economic activity in the manufacturing sector is at its highest levels since June 2011, say the nation’s supply executives in the latest Manufacturing Institute for Supply Management (ISM) Report On Business.

“The Institute for Supply Management (ISM) index jumped upward in July from what was a relatively flat period of production in manufacturing during the second quarter of this year,” says Daniel Meckstroth, Chief Economist for the Manufacturers Alliance for Productivity and Innovation (MAPI). “The index was 55.4 in July and averaged 50.2 in April to June; 50 is the dividing line between growth and decline. The July report is particularly comforting because the future direction for manufacturing activity had been uncertain while the overall economy struggled to achieve very modest growth in the first half.

“A surge in production and new orders in July, as indicated in the report, gives growth momentum to the sector and confirms our forecast of an acceleration in manufacturing activity in the second half of 2013,” adds Meckstroth. “Firms are taking advantage of ultralow interest rates (while they last) and investing in business equipment. There remains pent-up demand for housing and motor vehicles, driving manufacturing growth. In addition, private transportation infrastructure (railroad, trucks, aerospace) is seeing new investment.”

The PMI registered 55.4 percent, an increase of 4.5 percentage points from June’s reading of 50.9 percent. June’s PMI reading, the highest of the year, indicates expansion in the manufacturing sector for the second consecutive month.

“It’s a great way to start the second half of 2013,” says Bradley J. Holcomb, CPSM, CPSD, chair of the ISM Business Survey Committee.  “I think it’s a very positive and well-balanced report in terms of all of the underlying metrics. Things are pointing in a very favorable direction right now.”

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