A gauge of U.S. manufacturing unexpectedly jumped to the highest since May 2004 as orders, production and employment all picked up, offering a positive sign for the economy even as trade tensions weigh on the outlook.
Highlights of ISM Manufacturing (August)
- Institute for Supply Management's factory index climbed to 61.3 (est. 57.6, exceeding all estimates in a Bloomberg survey) from 58.1; readings above 50 indicate expansion.
- Measure of new orders advanced to 65.1 from 60.2; production index increased to 63.3 from 58.5.
- Measure of export orders fell to a 10-month low of 55.2 from 55.3 while the index of imports slipped to 53.9, lowest since last September, from 54.7.
The report shows factories remained solid in the third quarter and adds to signals that the nearly decade-old expansion will hold up well in the second half of 2018. The rise in the employment gauge also suggests manufacturers may record another month of strong payroll gains in Labor Department figures due Friday.
The gauges of exports and imports also may indicate that months of intensifying tensions are taking a toll on trade. Negotiations with Canada to modernize the North American Free Trade Agreement ended without a deal by Friday's deadline, though talks are scheduled to resume Wednesday.
President Donald Trump wants to move ahead with tariffs on $200 billion of Chinese imports as soon as a public-comment period concludes Sept. 6, Bloomberg News reported last week, citing six people familiar with the matter.
- Gauge of employment climbed to six-month high of 58.5 from 56.5.
- Gauge of supplier deliveries rebounded to 64.5, near the highest since 2004, from 62.1; figure shows longer lead times as producers have more difficulty meeting demand.
- Index of factory order backlogs rose to 57.5 from 54.7.
- Gauge of prices paid for materials fell to 72.1, lowest since December, from 73.2.
- Sixteen of 18 manufacturing industries reported growth in August; wood products and primary metals saw contraction, ISM said in a statement.
By Jeff Kearns