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.
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 points 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 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.
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 points 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.