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Manufacturing in US Expands at Fastest Pace in 13 Years

Oct. 2, 2017
Robust order growth and healthy production pushed the Institute for Supply Management index to record levels.

Powered by robust order growth and healthy production, American manufacturing expanded last month at the fastest pace in 13 years, figures from the Institute for Supply Management showed on Oct. 2.

Factory index climbed to 60.8 (est. 58.1), the highest since May 2004, from 58.8; readings above 50 indicate expansion

Measure of new orders increased to 64.6, the strongest since February, from 60.3 Employment gauge rose to 60.3, the best reading in more than six years, from 59.9 Index of prices paid advanced to 71.5, the highest since May 2011, from 62

The strength of the advances in the ISM’s gauges partly reflects impacts from hurricanes Harvey and Irma. Harvey forced the shutdowns of Houston-area refineries and chemical plants. Many retail establishments, including car dealerships, were flooded in the storms and merchandise was destroyed.

Timothy Fiore, the ISM survey committee chairman, said that the most direct impact from the storms was in the supplier deliveries index, indicating slower deliveries; that gauge factors into the overall index.

Seventeen of 18 industries reported growth in September; only furniture makers showed contraction, according to ISM.

While increased factory bookings and production may also reflect a bounce-back from the storm, the nation’s producers had already been on firmer footing because of improving global demand and an increase in U.S. capital spending. The ISM also reported a pickup in its measure of exports as producers benefit from a U.S. dollar that’s weakened this year, making American-made goods more attractive to overseas purchasers.

Orders will probably remain strong in coming months as a gauge of customer inventories held close to a six-year low. What’s more, the ISM’s order backlogs index crept up to the highest level since April 2011, helping explain why more factories are stepping up hiring.

Other highlights from the report include:

  • The ISM production measure rose to three-month high of 62.2 in September from 61.
  • The measure of export orders climbed to 57 from 55.5.
  • The Gauge of order backlogs rose to 58 from 57.5
  • The Index of supplier deliveries increased to 64.4, the highest reading since July 2004, from 57.1. This figure shows longer lead times as producers have trouble meeting demand.

By Agnel Philip

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