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U.S Manufacturing Expands at Fastest Pace in 13 Years

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American manufacturing expanded last month at the fastest pace in 13 years, powered by robust order growth and healthy production, figures from the Institute for Supply Management showed Monday.

Highlights of ISM Manufacturing (September)

  • Factory index climbed to 60.8 (est. 58.1), the highest since May 2004, from 58.8; readings above 50 indicate expansion
  • Measure of new orders increased to 64.6, the strongest since February, from 60.3
  • Employment gauge rose to 60.3, the best reading in more than six years, from 59.9
  • Index of prices paid advanced to 71.5, the highest since May 2011, from 62

    • Key Takeaways

    The strength of the advances in the ISM’s gauges probably includes the recovery and restarting of business following Hurricane Harvey. The storm forced the shutdowns of Houston-area refineries and chemical plants. Many retail establishments, including car dealerships, were flooded and merchandise destroyed.

    While increased factory bookings and production reflect a bounce-back from the storm, the nation’s producers had already been on firmer footing because of improving global demand and an increase in U.S. capital spending.

    Manufacturing has steadily expanded for the better part of two years as consumers continue to spend and businesses invest. The ISM also reported a pickup in its measure of exports as producers benefit from a U.S. dollar that’s weakened this year, making American-made goods more attractive to overseas purchasers.

    Orders will probably remain strong in coming months as a gauge of customer inventories held close to a six-year low. What’s more, the ISM’s order backlogs index crept up to the highest level since April 2011, helping explain why more factories are stepping up hiring.

    Other Details

  • ISM production measure rose to three-month high of 62.2 in September from 61
  • Measure of export orders climbed to 57 from 55.5
  • Gauge of order backlogs rose to 58 from 57.5
  • Index of supplier deliveries increased to 64.4, the highest reading since July 2004, from 57.1; figure shows longer lead times as producers have trouble meeting demand

    • Bloomberg

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