NAPM index heats up with August gains

Don Hogsett, September 17, 2001

Providing some hope that the U.S. industrial sector may finally be recovering from its year-long slump, a bellwether gauge of U.S. manufacturing recorded its single biggest gain of the past five years during August, buoyed by strengthening new order rates and factory production.

The widely watched monthly manufacturing index of the National Association of Purchasing Management (NAPM), jumped up to a level of 47.9, a sharp gain of 430 basis points from 43.6 in July. The monthly benchmark came in substantially ahead of a projected reading of 43.9. The August reading was the strongest since November 2000, the NAPM reported.

An index reading beneath 50 indicates that manufacturing activity is slowing, and the NAPM barometer has fallen beneath that break-even point for the past 13 months. Still, the August reading is a strong improvement over July and marks a big recovery from a 10-year low of 41.2 reached in January.

"The manufacturing sector is in its 13th month of decline but appears to show signs of an upward movement as the index made its most significant gain since June 1996," said Norbert Ore, chairman of the NAPM's manufacturing business survey committee. "It is particularly encouraging that 12 of 20 industries reported growth in new orders."

The August reading, said the NAPM, suggests that, while the overall manufacturing sector continues to contract, its rate of decline has slowed substantially. It also indicates that the overall U.S. economy is picking up steam and growing at a somewhat faster pace.

Helping to fuel the big August gain, the NAPM's Production Index shot up to 52.2 in August, a big 580 basis-point gain from an anemic 46.4 in July. It's the first time the index has risen above a level of 50 percent after eight straight months of decline.

The New Orders Index soared above the 50 percent mark for the first time in 14 months, climbing to 53.1 from a weak 46.3 in July, a whopping gain of 680 basis points.

On the downside, the Backlog of Orders Index failed to grow for a 16th straight month. However, at a level of 44.5 percent, the rate of decline was slowing and came as an improvement over the 42.5 recorded the prior month, and the 40.0 mark of May.

Manufacturers continued to burn off excess stockpiles at a rapid pace in August, and the Inventories index registered 37.7, up from 35.8 in July. Only two industries, leather and food, reported a higher level of inventories during the month.

Employment levels remained weak in August, with a reading of 40.8 marking an 11th straight month the Index has fallen beneath the 50 percent level. "There were no reports of higher employment in any of the sectors during the month," the NAPM reported.

Featured Video

  • Live From New York: Fashion Comes Across the Pond

    Camera Icon More Videos

Subscribe to
Home & Textiles Today eDaily
Receive the news you need to know about the trends in the industry delivered right to your inbox.


HTT Cover October 2017

See the October 2017 issue of Home & Textiles Today. In this issue, we look at the Top 25 Online Retailers.  H&TT's exclusive annual ranking of the biggest online sellers of home textiles finds that while pure play etailers continue to fly, bricks & clicks are digging into omnichannel. See details!