ISM reports eighth month of expansion in manufacturing

August’s reading suggests the overall economy has expanded now for 22 months.

“In August, US manufacturing activity remained in expansion territory, though it has lost ground in a number of key measures — namely, the New Orders, Backlog and Imports indexes,” commented Susan Spence, chair of the ISM Manufacturing Business Survey Committee.

She added: “Of the five subindexes that make up the PMI, the only one that grew faster than last month was Supplier Deliveries (up 0.4 percentage point), indicating a continuing slowdown of the supply chain.”

Three of four demand indicators (New Orders, Backlog of Orders, and New Export Orders) remained in expansion territory, ISM said. At the same time, Customers’ Inventories remained ‘too low,’ which is generally considered positive for future production.

Industries that reported growth in August included primary metals, transportation equipment, fabricated metal products, and machinery, among others.

“Prices continue to rise on all goods,” reported a respondent from the machinery sector. “Suppliers are noting that energy, steel and labor costs are increasing very quickly. We continue to try to move products around to offset costs. We have moved more products to offshore sources to try to minimize cost impacts.”

“This month is a blur: Steel prices continue to climb as supply diminishes, aluminum is rising after dropping, and there are many holes on the plate side,” said one primary metals manufacturer. “Demand seems to be a seesaw. Our prediction ability continues to diminish, with the exception that the year will remain difficult until the end.”