Manufacturing Activity Expands
U.S. manufacturing activity posted a fourth straight month of expansion in August, hitting a level the index has not seen since January 2019, according to the Institute for Supply Management’s monthly Report on Business.
This is the third straight month of expansion for the manufacturing activity index, while the economy registered growth for a fourth consecutive month.
According to the ISM, U.S. manufacturing activity edged up another 1.8% in August, and now stands at 56%. Anything over 50% is considered expansionary.
In June, the ISM’s index posted a gain of 9.5%, rocketing from a severe contraction back into expansion. July’s gain was a more modest 1.6%, speeding up to a 1.8% in this most recent survey.
The breakdown of growth was similar to July’s report, with increase in activity led by new orders and production. Employment, however, remained in contraction.
Supplier deliveries slowed at a faster rate, raw materials inventories contracted while exports and imports grew.
Said Timothy Fiore, Chairman of the ISM: “After the coronavirus (COVID-19) brought manufacturing activity to historic lows, the sector continued its recovery. In August, the first full month of operations after supply chains restarted and adjustments were made for employees to return to work.”
Fiore went on to say that many companies went through an adjustment period with the many safety measures that needed to be implemented. Additionally, sentiment among industrial executives was positive, with 1.4 positive comments for every negative comment.
Additionally, the economic climate continues to impact investment, with many panelists putting off capital investments for the rest of 2020.
Said one executive in the machinery industry, “Capital equipment new orders have slowed again. Quoting is active. Many customers waiting for the fourth quarter to make any commitments.”
Of eighteen industries, fifteen reported growth in August (compared to thirteen in July). Growth was led by wood products; plastics and rubber products; food products; textiles and chemicals.
The three industries posting declines included printing & related support activities; petroleum products and furniture.