The Institute for Supply Management’s Purchasing Managers Index (PMI) registered 59% in August, its highest level since March 2011 and a sign that the U.S. manufacturing economy continues its slow and steady improvement.
Released September 2, ISM’s Manufacturing Report on Business also revealed a jump in the group’s New Orders Index. New orders registered 66.7% for the month, a 3.3% increase compared to July and its highest level since April 2004, when new orders hit 67.1%.
“At the same time, comments from the panel reflect a positive outlook mixed with caution over global geopolitical unrest,” said Bradley J. Holcomb, chairman of ISM’s Manufacturing Business Survey Committee, which issues the monthly report.
August’s reading indicates that the U.S. manufacturing economy grew for the 15th straight month. In addition to growth in new orders, ISM’s report showed an increase in production, employment, and inventories.
ISM’s Production Index registered 64.5 for the month, an increase of 3.3% compared to July, and the index’s sixth consecutive month of growth. August also marked the highest reading since May 2010, when the Production Index registered 64.6%.
ISM’s Employment Index continued to grow as well, registering 58.1 for the month—virtually even with July’s reading of 58.2. This represents the 14th consecutive month of growth in manufacturing employment, according to ISM.
Purchasing managers’ inventories of raw materials grew in August, as well, as ISM’s inventories index rose 3.5% following contraction in July. Purchasing managers reported that customer inventories grew in August, too, rising nearly 6 percentage points to 49%. Despite the growth, this remains below the 50-point mark indicating that customer inventories are too low, according to ISM.
Overall, 17 of the industries surveyed in August reported expansion during the month. The textile mill sector was the only industry that reported contraction.
The report also revealed price increases in the following commodities: aluminum, aluminum products, electronic components, hydrochloric acid, PET resin, plastic resin, polypropylene, propylene, stainless steel, stainless steel products, steel, and hot rolled steel. Commodities down in price include copper, corn, methanol, natural gas, and soybean oil. Commodities short in supply are stainless steel and wood pallets, according to purchasing managers surveyed.