The National Association of Purchasing Managers earlier this morning affirmed that the U.S. industrial base continued to strengthen in the month just concluded, as its latest survey detailed that manufacturing activity rose to a reading of 55.7 across the country. That result was well above the dividing line of 50.0, which separates an expanding manufacturing category from one that is now contracting.
Moreover, this result was the fastest rate of improvement in this area in more than two years, and exceeded the consensus forecast for the latest month of 53.8. In July, the manufacturing survey had registered a score of 55.4.
This latest manufacturing results bolstered our expectations that the overall economic expansion will tick up a notch or two in the final months of this year.
Breaking the report down to its component parts, we find that new orders jumped to their best level in more than two years as well reaching a stellar result of 63.2 in August up from 58.3 in July. Employment, however, eased to 53.3 from 54.4. Please note that the government will release its August employment report on Friday. Current expectations are that the nation added between 170,000 and 180,000 jobs last month. In July, the United States had shown a net increase of 162,000 payrolls.
Elsewhere in the report, we find that production's rate of growth eased somewhat last month, but remained quite strong registering a score of 62.4 in August, vs. 65.0 the month before. Additional improvement last month, meantime, came from supplier deliveries, prices, and exports. Further, backlogs, albeit still falling in August, did so at a lesser rate than in July.
As to this report, the latest data were a further bit of fresh air, after manufacturing had been hurt earlier in the year by cuts in U.S. government spending and weaker international demand. Things started to turn the corner earlier this summer, however, and now are taking a further step forward.
All in all, this was a decent start to the month of August, as far as reports are concerned. Going forward in the days to come in the fast-ending summer, we also are due to get the companion report on non-manufacturing activity on Thursday. Here, growth is also indicated, but at a slightly lesser rate than in July.
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.