Manufacturing ready to roll, say purchasing managers
July 3, 2007,
Tempe, Ariz. -- The nation's manufacturing sector rebounded strongly during the second quarter of the year and gained strength for a fifth straight month in June, getting a big boost from an unusually strong gain in production, the nation's purchasing managers reported.
The widely watched gauge of smokestack America compiled by the Institute for Supply Management (ISM) rose by 1.0 percentage points to a reading of 56.0%, building on gains during each of the preceding four months.
"Following a weak first quarter, the manufacturing sector rebounded in a strong fashion during the second quarter," said Norbert Ore, chair of the ISM Manufacturing Business Survey Committee.
In June, manufacturing expanded at its fastest pace since April 2006 when the purchasing managers' index registered 56.9. Moreover, "This performance appears sustainable in the third quarter due to the current strength in new orders and production," which rose 0.7 and 4.6 percentage points respectively, said Ore.
Driving growth in the sector, in addition to production and new orders, was a 1.0 percentage-point growth in order backlogs. In more good news, the index measuring the price manufacturers pay for raw materials, while still high, grew at a slower pace, with a reading of 68.0, down from 71.0 in May.
Further, customers' inventories contracted to a reading of 47.0 from 48.0 in May, suggesting they may have to restock their shelves soon, fueling further growth in manufacturing.
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