US manufacturing index turns up in August, ending 3-month slide

01 September 2010 16:20  [Source: ICIS news]

Manufacturing activity upWASHINGTON (ICIS)--US manufacturing activity showed renewed gains in August, the Institute for Supply Management (ISM) said on Wednesday, ending what had been a worrisome three-month decline in a key production index.

The institute said that its closely watched purchasing managers index (PMI) rose to 56.3% in August from the 55.5% level recorded for July.

From a recent high of 60.4% in April this year, the PMI had edged downward in May, June and July, adding to concerns that the US economic recovery might falter.

The purchasing managers index is a composite of supplier responses to the institute’s monthly survey regarding 18 different production categories among 13 major industrial sectors.

A PMI reading above 50% indicates that the nation’s crucial manufacturing sector is expanding, while an index measure below that level shows that production is contracting.

The index had been improving generally from a recession low point of 32.5% in December 2008, but then peaked at 60.4% in April before beginning to slide. The August advance appeared to end that renewed downturn.

Norbert Ore, chairman of the institute’s survey committee, said that the August results showed that “manufacturing activity continued at a very positive rate in August [as] new orders continued to grow but at a slightly slower rate”.

In addition to new orders, the PMI composite score includes data on manufacturers’ production levels, employment, order backlogs, prices and export volumes, among others.

In the 13 major industrial groups surveyed for the index, chemicals production was among 11 that reported growth in August.

Other manufacturing sectors that are downstream consumers of chemical products also saw improvements last month, the institute said, including primary metals, transportation equipment, computer and electronic products and electrical equipment.

However, plastics were among five industrial segments that reported contraction in August, along with furniture production and general machinery manufacturing.

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