Economic activity in the manufacturing sector expanded in August for the third consecutive month, and the overall economy grew for the 51st consecutive month, say the nation’s supply executives in the latest Manufacturing ISM Report On Business®.
The PMI™ registered 55.7 percent, an increase of 0.3 percentage point from July’s reading of 55.4 percent. August’s PMI™ reading, the highest of the year, indicates expansion in the manufacturing sector for the third consecutive month. The New Orders Index increased in August by 4.9 percentage points to 63.2 percent, and the Production Index decreased by 2.6 percentage points to 62.4 percent. The Employment Index registered 53.3 percent, a decrease of 1.1 percentage points compared to July’s reading of 54.4 percent. The Prices Index registered 54 percent, increasing 5 percentage points from July, indicating that overall raw materials prices increased when compared to last month. Comments from the panel range from slow to improving business conditions depending upon the industry.
Of the 18 manufacturing industries, 15 are reporting growth in August …
Two of the three key readings were fine, as noted above. Backlog of Orders stayed stuck in contraction at 46.5%, up from 45.0% in July.
My take, especially since this is the second month of backlogs contracting? Manufacturers are living month to month — for now, rather well. But they’re reluctant to make long-lived commitments. This means, though I hope it’s not the case, that the index could head south very quickly if the headwinds get stronger.
UPDATE: Should also note that a lot of the comments are not consistent with the reported briskly expanding index.