August marks second straight uptick

Don Hogsett, Staff Staff, September 8, 2003

As the U.S. economy picks up steam, the key manufacturing sector improved for a second straight month in August, with activity jumping up by 2.9 percentage points to a level of 54.7 from 51.8 in July, the nation's purchasing managers reported.

The Institute of Supply Management's monthly poll of the nation's purchasing managers, the men who order raw materials and supplies for the nation's largest manufacturing companies, showed activity at its highest level since December of last year.

Pointing to a second-half recovery, most key components of the monthly index jumped up, most notably production and new orders. "Though two months of growth do not establish a trend, there is strength in the various segments of this report that we have not seen for some time," said Norbert J. Ore, chairman of the trade group's business survey committee. "The continuation of a second-half recovery appears on track."

Manufacturing activity during August jumped up by almost three percentage points during August to a reading of 54.7, following a July gain of 1.0 percentage points. Any reading over the benchmark level of 50 indicates growth in the manufacturing sector, a key driver of the nation's economy, while anything below points to a slowdown in activity.

Two crucial components of the widely watched index rallied in August: new orders and production. The new orders index jumped up to 59.6, a gain of 3.0 percentage points; and the production index raced ahead by 8.3 percentage points to a new reading of 61.6 percent.

But as more manufacturing jobs move overseas, the employment index continued to wane, slipping to a reading of 45.9 from 46.1 the prior month. It marked the 35th consecutive month that manufacturing employment has decreased.

August snapshot
Manufacturing benchmarks
Month-over-month percentage-point change

Source: Institute for Supply Management
Purchasing Managers Index +2.9%
New Orders +3.0
Production +8.3
Employment -0.2
Inventories -3.4
Customers' inventories +0.5
Prices manufacturers pay.. 0.0
Order backlogs +0.5
Export orders +1.5
Imports -0.9

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