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Business of Engineering

Manufacturing index rises for fourth straight month

The manufacturing sector reported its fourth straight month of growth, rising to 56%.

By Chris Vavra September 2, 2020
Courtesy: CFE Media and Technology

Economic activity in the manufacturing sector grew in August, with the overall economy notching a fourth consecutive month of growth, say the nation’s supply executives in the Institute for Supply Management’s (ISM) Report On Business. The August purchasing manufacturers’ index (PMI) registered 56%, up 1.8 percentage points from the July reading of 54.2%. New orders rose more than six percent to 67.6%; and production also increased over a point to 63.3%. Fifteen of the 18 industries involved in the index reported growth in August.

“After COVID-19 brought manufacturing activity to historic lows, the sector continued its recovery in August, the first full month of operations after supply chains restarted and adjustments were made for employees to return to work,” said Timothy R. Fiore, CPSM, C.P.M., chair of the Institute for Supply Management Manufacturing Business Survey Committee in a press release. “Survey Committee members reported that their companies and suppliers operated in reconfigured factories, with limited labor application due to safety restrictions. Panel sentiment was generally optimistic (1.4 positive comments for every cautious comment), though to a lesser degree compared to July.”

What respondents are saying

  • “Watching COVID-19 situations in Mexico, Brazil, Philippines [and] Hong Kong. High rates of COVID-19 surging. Currently, lines of supply no longer impacted by COVID-19 related events.” (Computer & electronic products)
  • “Business is very good. Production cannot keep up with demand. Some upstream supply chains are starting to have issues with raw material and/or transportation availability.” (Chemical products)
  • “Airline industry continues to be under great pressure.” (Transportation equipment)
  • “Current sales to domestic markets are substantially stronger than forecasted. We expected a recession, but it did not turn out that way. Retail and trade customer markets are very strong and driving shortages in raw material suppliers, increasing supplier orders.” (Fabricated metal products)
  • “Homebuilder business continues to be robust, with month-over-month gains continuing since May. Business remains favorable and will only be held back by supply issues across the entire industry.” (Wood products)
  • “We are seeing solid month-over-month order improvement in all manufacturing sectors such as electrical, auto and industrial goods. Looking to add a few factory operators.” (Plastics & rubber products)
  • “Rolling production forecasts are increasing each week compared to prior forecast.” (Primary metals)
  • “[Production ramp-up] has been a struggle. We have started and stopped lines numerous times at all 18 of our manufacturing plants due to COVID-19 issues. Surprisingly, our direct suppliers have done an excellent job on shipping ingredients and packaging on time.” (Food, beverage & tobacco products)
  • “Strong demand from existing and new customers for our products, stable-to-decreasing input costs for our operations, and record numbers of new business opportunities from prospective customers’ reshoring measures. All trends continuing from the first quarter of fiscal year 2017.” (Electrical equipment, appliances & components)
  • “Capital equipment new orders have slowed again. Quoting is active. Many customers waiting for the fourth quarter to make any commitments.” (Machinery)
  • “We are starting to see parts of our business rebound in August, while other parts remained weak. Some of our export business has come back for the first time since the start of COVID-19; however, domestic portfolios remain mixed.” (Paper products)

Chris Vavra
Author Bio: Chris Vavra is an associate editor for CFE Media.