United States: ISM manufacturing index hits near two-year high in August
The Institute for Supply Management (ISM) manufacturing index increased from 54.2 in July to 56.0 in August, beating market expectations of 54.5 and marking the highest reading since November 2018. Consequently, the index moved further above the 50-threshold that separates expansion from contraction in the manufacturing sector.
August’s result was driven by a surge in new orders—which hit a 16-year high—and a stronger expansion in production, while employment improved slightly—but continued to point to a deterioration. Moreover, new export orders and backlogs of work also expanded in August relative to July.
Commenting on recent developments in the manufacturing sector with regards to August’s print, analysts at Goldman Sachs, noted:
“The composition of the report was strong, with increases in each of the three key components. Construction spending increased in July, and growth in June and May was revised up. We left our Q3 GDP tracking estimate unchanged on net at +30% [saar]. Our preliminary August Current Activity Indicator now stands at +1.3% (vs. +2.0% in July).”