US manufacturing growth at highest pace so far in 2013

01 November 2013 14:56  [Source: ICIS news]

WASHINGTON (ICIS)--The pace of US manufacturing activity rose slightly in October, a key survey said on Friday, reaching the highest level for this year and the best performance since March 2011.

In its monthly report, the Institute for Supply Management (ISM) said that its survey of purchasing managers in a wide variety of manufacturing firms showed a small bump of 0.2 percentage points in October from September, reaching 56.4%.

Known as the purchasing managers index (PMI), the survey measure was at 56.2% in September. The October increase is the fifth gain in five months.

The most recent higher PMI rate was 59.3% in March 2011.

The PMI is a composite of supplier responses to the ISM’s monthly survey of 10 different business performance measures in 18 major manufacturing sectors. Among the performance areas measured are new orders, employment, materials prices, imports and exports.

A PMI reading above 50% indicates the US manufacturing sector is expanding, while an index measure below 50% means production is contracting.

ISM survey chairman Bradley Holcomb noted that “the PMI has increased progressively each month since June”. The index had seen a one-month dip into contraction in May when it measured only 49%.

Among the 10 performance measures sampled in the survey, new orders rose by 0.1 of a point in October, the backlog of orders rose by two points and exports of manufactured goods shot up by five points.

However, production eased by 1.8 percentage points and employment among manufacturers fell by 2.2 points.

Among the 18 production sectors surveyed by ISM, 14 reported growth in October, including plastics and rubber products.

Four manufacturing industries reported contraction last month, including chemicals.

For the PMI overall, a reading in the mid-50s is a historically healthy range.

In the 65 years that ISM has been conducting the survey, only occasionally has the PMI seen manufacturing expansion rates in the upper 50s and the low 60s. Those upper-range readings were mostly in the in the high growth years of the 1950s and 1960s as the post-war baby boom generation helped drive demand.

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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