Factory activity expands in August

ISM’s Purchasing Manager’s Index hits 2013 high; registers third straight month of growth in U.S. manufacturing sector

The U.S. manufacturing economy expanded for the third straight month in August as the Institute for Supply Management’s Purchasing Manager’s Index registered 55.7, its highest reading this year.

The August report was up 0.3% compared to July, with purchasing managers from across the country reporting slow to improving business conditions during the month. Executives in most sectors reported growth, according to ISM.

A PMI above 50 indicates expansion in the U.S. manufacturing sector.

ISM’s New Orders, Production and Employment Indices also grew in August while its Inventory Index contracted for the second straight month, indicating falling inventory levels at factories nationwide. Nine industries reported inventory decreases for the month: wood products; textile mills; plastics & rubber products; fabricated metals; paper products; furniture & related products; chemical products; and miscellaneous manufacturing. Five sectors reported higher inventories: apparel, leather & allied products; computer & electronic products; transportation equipment; electrical equipment, appliances & components; and machinery.

Lower inventory levels are good news to suppliers, and many distributors serving industrial markets were encouraged by the slowly improving conditions over the summer.

“Overall, customer inventory is down,” Mark Simon, vice president of sales for electronics distributor Allied Electronics, told Global Purchasing in an August interview. “We’re a high-service distributor with hundreds of millions of dollars in inventory, so that’s good for us.”

Globally, the manufacturing sector grew in August, as well, according to the August JP Morgan Global Manufacturing PMI, also released this week. The composite index, produced in conjunction with ISM, registered 51.7, up from 50.8 in July, signaling the eight straight month of growth.

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