September 1, 2017 – The ISM Manufacturing Index is derived from a survey of purchasing managers and their outlook on overall conditions by looking at factors such as orders for durable goods, industrial production and hiring. It gives a general direction rather than the specific strength of the factory sector and manufacturing activity in the U.S. A reading above 50 is an indicator that the manufacturing sector is growing while a reading below 50 indicates a contraction
The August ISM Manufacturing report came in at a level of 58.8, well above expectations of 56.6, above July’s level of 56.3. New orders and production reported strong numbers the past 3 months in the ISM Manufacturing index at 60.3 and 61.0, respectively. Prices were also up to 62.0 with raw material prices up for the 18th straight month.
14 of the 18 manufacturing industries reported growth in August with the highest growth in textile mills, petroleum & coal products, and machinery. Apparel products, primary metals, and furniture products lagged in August. With any ISM reading above 50 signaling growth, we expect August’s reading of 58.8 to keep the manufacturing sector expanding and boosting GDP. Solid reports of new orders and production also contribute to the confidence in the manufacturing sector.