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Manufacturing Pace Edges Up in August

Bill Koenig
By Bill Koenig Senior Editor, SME Media

The pace of manufacturing improved slightly in August and continues at high levels, the Institute for Supply Management said today.

The Tempe, Ariz.-based group’s manufacturing index, known as the PMI, edged up to 59.9 percent last month, up from 59.5 percent in July.

ISM said new orders and production supported the index last month. Employment held the PMI down as some manufacturers continued to struggle to fill job vacancies.

An index above 50 percent indicates economic expansion, while levels below 50 percent show contraction. The PMI has been in positive territory for 15 straight months. The 59.9 percent PMI for August matches the 12-month average for the index.  

“It’s another great manufacturing month,” Timothy R. Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call. He said production levels were strong and with new orders “you couldn’t ask for more.”

With employment, companies “want to hire more people,” he said. “Demand is calling for more people” but manufacturers still are having trouble hiring.

The PMI is considered a leading economic indicator and a barometer of where the manufacturing economy is headed. The index is based on a survey of supply management executives in 18 industries.

In August, 15 industries reported economic expansion including machinery, primary metals, fabricated metal products and transportation equipment. Two industries reported economic contraction.

The group’s New Orders Index reached 66.7 percent in August, up from 64.9 percent the month before. Fourteen industries reported gains in new orders, with only non-metallic mineral products reporting a decline.

The Production Index rose to 60 percent from 58.4 percent in July. Thirteen industries reported output increases.

The Employment Index slipped to 49 percent in August, down from 52.9 percent in July. Only seven of 18 industries reported job gains. Another seven industries reported declines in employment.

Fiore said manufacturing will sustain an impact that slammed Louisiana this week. The story will reduce output of chemicals and plastics, he said.

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