US factories grow at fastest pace in 19 months as recovery continues
Activity in the US manufacturing sector rose at the fastest pace since the start end of 2018, a survey has shown, although factories continued to slash jobs.
The Institute for Supply Management’s (ISM) manufacturing purchasing managers’ index (PMI) rose to 56 in August from 54.2 in July.
It was the highest score since November 2018 last year, with a figure over 50 indicating expansion.
The pick-up in the manufacturing sector was driven by a surge in new orders. ISM’s measure of orders jumped to 67.6 last month, the highest score since the end of 2017.
“After the coronavirus brought manufacturing activity to historic lows, the sector continued its recovery in August,” said Timothy Fiore, chair of the ISM’s manufacturing committee.
He said August was “the first full month of operations after supply chains restarted”.
Employment falls amid uneven recovery
However, respondents to the ISM’s survey said that they laid off workers again in August.
The jobs gauge came in at 46.4, an improvement on July. But it still marked a reduction in the workforce and added to signs that the US’s jobs recovery is slowing.
After an unexpected rebound in May after April’s collapse, the US employment market has looked shaky.
It comes as the Republicans and Democrats remain at loggerheads over the next round of fiscal stimulus. The country is also gripped by the run-up to the November presidential election.
Andrew Hunter, senior US economist at consultancy Capital Economics, said: “The manufacturing sector has continued to recover at a solid pace.”
“But the recovery in production is badly lagging the stronger turnaround in spending, with the result that inventories are now looking very lean.”