PMI jumps to highest level in 2013 as growth accelerates
Manufacturing’s summer surge continued in August, as the monthly ISM Report rose for the third straight month to its highest level of 2013.
The Institute for Supply Management’s PMI for August was at 55.7%, an increase of 0.3 percentage points from July’s high-water mark and the tenth increase in the last 12 months. Since the PMI fell to a regressive level of 49.0% in May, the PMI has climbed almost 7 percentages points to reach a new high for the past 12 months. A figure above 50% indicates general growth for manufacturing. A figure above 43.2% indicates growth for the general economy, so August’s figure marked the 51st consecutive month of economic growth.
All major indicators were positive for August, according to Bradley Holcomb, chairman of the ISM Business Survey Committee. “The Prices Index registered 54%, increasing 5 percentage points from July, indicating that overall raw materials prices increased when compared to last month. Comments from the panel range from slow to improving business conditions depending upon the industry,” Holcomb said.
The New Orders Index rose 4.9 percentage points in August to 63.2%, its highest level of the year, and manufacturers sounded optimistic about future prospects. Among the comments from survey participants:
- "Slight improvements in both domestic and international sales." (Fabricated Metal Products)
- "Material prices continue to be favorable; business is steady." (Paper Products)
- "Slowing down slightly, but still stronger than last year by 20%." (Furniture & Related Products)
- "Summer seasonal businesses are doing well after a late start." (Printing & Related Support Activities)
- "Still not seeing the year we had expected. Cautious about the balance of 2013." (Machinery)
- "Tight government spending still affecting business." (Transportation Equipment)
- "With improved weather outlook in the central states, agricultural prices are relaxing year over year." (Food, Beverage & Tobacco Products)
- "We have benefitted from the Yen; seeing a 20 percent decrease in material costs from 2012 to 2013." (Chemical Products)
"The past relationship between the PMI and the overall economy indicates that the average PMI for January through August (52.5%) corresponds to a 3.2% increase in real gross domestic product on an annualized basis,” Holcomb said. “In addition, if the PMI for August (55.7%) is annualized, it corresponds to a 4.2% increase in real GDP annually.”
The Last 12 Months