Tuesday, September 3, 2013

ISM Manufacturing Continued Upward Trend in August

The ISM manufacturing index rose 0.3 points in August to 55.7, exceeding expectations of a decline and well above the second quarter average of 50.2. The index is at its highest level since early 2011 and has now seen improvements for three straight months.

It’s important to note that August’s strong reading may be an outlier because the regional Federal Reserve readings for August were not as strong. The August reading may overstate the strength of the manufacturing sector.

The details of the report were mixed. New orders rose above 60 for the first time since early 2011, settling at 63.2, a 4.9 point increase from July. However production and employment declined from the previous month. Production dropped 2.6 points to 62.4 and employment declined 1.1 points to 53.3. Both indexes still remain in expansionary territory.

Backlogged orders and inventories remained below the expansionary threshold of 50, with a recording of 46.5 and 47.5 respectively. The gap between new orders and inventories – a proxy for future production – increased to 15.7 points, from 4.4 the previous month.

Read the ISM release.

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