Get breaking news alerts via email

Click here to manage your alerts
Pace of U.S. manufacturing hit 2-year peak in August
First Published Sep 03 2013 09:20 am • Last Updated Sep 03 2013 02:29 pm

WASHINGTON • U.S. factories expanded last month at the fastest pace since June 2011 on a jump in orders. The report signals that manufacturing output could strengthen in coming months.

The Institute for Supply Management, a trade group of purchasing managers, said Tuesday that its manufacturing index rose to 55.7 in August from 55.4 in July. That topped the index’s 12-month average of 52. A reading above 50 indicates growth.

Join the Discussion
Post a Comment

A gauge of new orders rose nearly five points to 63.2, the highest level in more than two years. At the same time, production increased more slowly than in July, and factories added jobs at a weaker rate. Despite the drop, production reached its highest level in 2½ years.

The overall improvement contrasts with other recent reports that had pointed to a slowdown in manufacturing. The ISM’s survey found broad-based growth, with 15 out of 18 industries reporting expansion and only one reporting contraction. That suggests that factory production could accelerate this year.

"The data unambiguously point to a pickup in ... manufacturing output growth after a weak" second quarter, Jim O’Sullivan, an economist at High Frequency Economics, said in a note to clients.

The Federal Reserve will closely examine Tuesday’s report, which comes two weeks before Fed policymakers will decide whether to slow their bond-buying program. Chairman Ben Bernanke has said the Fed will scale back its purchases this year if the economy continues to strengthen. The $85 billion in monthly bond purchases have been intended to keep interest rates low.

The jobs report for August, to be released Friday, is the most important remaining economic report the Fed will consider.

Orders from overseas also rose, a sign that improving economies in Europe and China may be boosting U.S. manufacturers. The 17 countries that use the euro grew in the April-June quarter after six quarters of recession.

And a private survey of purchasing managers in China found that manufacturing in that country expanded for the first time after shrinking for three months. It added to other recent evidence that China’s economy is stabilizing after a slowdown.

Last month, a Fed report found that factory output dipped in July. But that slip reflected a slowdown in auto production, which many analysts expect to be only temporary.

story continues below
story continues below

Companies also cut back in July on orders for long-lasting U.S. factory goods, according to a government report last week. That drop was driven by a sharp fall in demand for commercial aircraft, a volatile category.

But businesses also sharply reduced their orders for capital goods such as computers, electrical equipment and other items. That decline may signal that business investment, an important driver of the economy, could slow.

The economy grew at a modest 2.5 percent annual rate in the April-June quarter, the Commerce Department estimated last week. That was better than the government’s initial estimate of 1.7 percent.

But many economists now think the economy could slip a bit in the July-September quarter to a 2 percent annual growth rate or less.

Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Top Reader Comments Read All Comments Post a Comment
Click here to read all comments   Click here to post a comment

About Reader Comments

Reader comments on sltrib.com are the opinions of the writer, not The Salt Lake Tribune. We will delete comments containing obscenities, personal attacks and inappropriate or offensive remarks. Flagrant or repeat violators will be banned. If you see an objectionable comment, please alert us by clicking the arrow on the upper right side of the comment and selecting "Flag comment as inappropriate". If you've recently registered with Disqus or aren't seeing your comments immediately, you may need to verify your email address. To do so, visit disqus.com/account.
See more about comments here.
Staying Connected
Contests and Promotions
  • Search Obituaries
  • Place an Obituary

  • Search Cars
  • Search Homes
  • Search Jobs
  • Search Marketplace
  • Search Legal Notices

  • Other Services
  • Advertise With Us
  • Subscribe to the Newspaper
  • Access your e-Edition
  • Frequently Asked Questions
  • Contact a newsroom staff member
  • Access the Trib Archives
  • Privacy Policy
  • Missing your paper? Need to place your paper on vacation hold? For this and any other subscription related needs, click here or call 801.204.6100.