August PMI of 56.3% Shows Continuing Growth
Economic activity in the manufacturing sector expanded in August for the 13th consecutive month, reports the Institute for Supply Management, Tempe, Ariz. Manufacturing continued to grow in August as the PMI registered 56.3 percent, an increase of 0.8 percentage point when compared to July's reading of 55.5 percent. A reading above 50 percent indicates growth.
"Manufacturing activity continued at a very positive rate in August as the PMI rose slightly when compared to July. In terms of month-over-month improvement, the Production and Employment Indexes experienced the greatest gains, while new orders continued to grow but at a slightly slower rate,” says Norbert J. Ore, chairman of ISM’s Manufacturing Business Survey Committee.
Eleven of the 18 manufacturing industries reported growth in August, in the following order: Primary Metals; Apparel, Leather & Allied Products; Transportation Equipment; Fabricated Metal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; Computer & Electronic Products; Paper Products; Chemical Products; Food, Beverage & Tobacco Products; and Printing & Related Support Activities. The five industries reporting contraction in August were: Furniture & Related Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Plastics & Rubber Products; and Machinery.
A PMI in excess of 42 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the PMI indicates growth for the 16th consecutive month in the overall economy, says Ore. "The past relationship between the PMI and the overall economy indicates that the average PMI for January through August (57.8 percent) corresponds to a 5.3 percent increase in real gross domestic product. In addition, if the PMI for August (56.3 percent) is annualized, it corresponds to a 4.8 percent increase in real GDP annually."