U.S. Manufacturing Activity Index Hits Highest Since November 2018 - TheStreet

U.S. Manufacturing Activity Index Hits Highest Since November 2018

'The August [index] indicates the overall economy grew in August for the fourth consecutive month following contraction in April,' ISM says.
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The Institute for Supply Management’s manufacturing activity index rose to 56 in August, the highest level since November 2018, and up from 54.2 in July.

The gain in what’s also known as the purchasing managers index points to a rebound in the manufacturing sector from the downturn sparked by the coronavirus pandemic.

A figure above 50 indicates expansion in the manufacturing sector. The August figure topped economists’ median projection of 54.8, according to Bloomberg.

An index above 42.8%, “over a period of time, generally indicates an expansion of the overall economy,” according to ISM.

“Therefore, the August PMI indicates the overall economy grew in August for the fourth consecutive month following contraction in April,” the Institute for Supply Management said in a statement.

"The past relationship between the PMI and the overall economy indicates that the PMI for August (56) corresponds to a 3.9% increase in real gross domestic product (GDP) on an annualized basis," said Timothy Fiore, chairman of the ISM Manufacturing Business Survey Committee.

New orders helped fuel the gain, soaring to 67.6 in August from 61.5 in July.

“After the coronavirus Covid-19 brought manufacturing activity to historic lows, the sector continued its recovery in August, the first full month of operations after supply chains restarted and adjustments were made for employees to return to work,” Fiore said.

“Survey Committee members reported that their companies and suppliers operated in reconfigured factories, with limited labor application due to safety restrictions,” he added.

The employment index rose to 46.4 in August, a six-month high and up from 44.3 in July. But a number below 50 indicates total jobs are shrinking.

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