Manufacturers can go into the Labor Day weekend knowing that business conditions in the industry are still on pretty solid footing.
The Institute for Supply Management said in its monthly survey that economic activity in the manufacturing sector grew in August for the 39th straight month, with the group’s overall PMI index coming in at 54.5. That’s down slightly from July’s reading but it remains well above the 50 mark, which indicates expansion within the manufacturing economy.
"Manufacturing growth continued at a very strong pace in August,” said Norbert Ore, chair of the ISM’s Manufacturing Business Survey Committee. “Though the rate of growth was slightly under that of July, the sector continues to enjoy strength in new orders and production. In August, we also saw an uptick in manufacturing employment. The major concerns in manufacturing at this point are the continued upward pricing pressure that has existed for the past 13 months, and some industries are experiencing a degree of inventory buildup."
The new orders index, a key barometer for the industry, came in at 54.2 percent in August, slightly lower than the 56.1 percent registered in July but the 40th consecutive month the index has exceeded 50 percent. (A new orders reading above 51.1 percent, over time, is generally consistent with an increase in the Census Bureau's series on manufacturing orders.) Seven industries reported increases during August: Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Fabricated Metal Products; Computer & Electronic Products; Chemical Products; Paper Products; and Primary Metals.
The ISM said its employment index was 54 percent in August, an increase of 3.3 percentage points versus July's reading - the second consecutive month of growth in employment. The eight industries reporting growth in employment during August are: Electrical Equipment, Appliances & Components; Chemical Products; Nonmetallic Mineral Products; Fabricated Metal Products; Furniture & Related Products; Primary Metals; Paper Products; and Food, Beverage & Tobacco Products.
Meanwhile, pricing pressure experienced by manufacturers eased somewhat during the month, with the prices index dropping to 73.0 from July’s 78.5. The production index eased slightly, as did the inventories index.