The Institute for Supply Management’s gauge of U.S. manufacturing exceeded economist expectations in August, rising to a reading of 56.3 from a previous 55.5, to offer a glimmer of hope amid recent economic data showing slower growth.
Economists expected a reading of 55.5. Readings above 50 signal expansion.
Michael Moran, chief economist at Daiwa Capital Markets, said the gain was led by production and employment.
“The increase was small, and the level of the index was not overly impressive, but the result was encouraging,” Moran said. “The reading went against the grain of other recent indicators.”
The August production index rose to 59.9 from 57 in July. The employment component surged to a 27-year high of 60.4 from a previous 58.6. New orders decreased to 53.1 from 53.5 and the gauge of orders waiting to be filled dropped to 51.5 from 54.5. Prices paid climbed to 61.5 in August from 57.5 and a measure of inventories rose to 51.4 from 50.2.
Manufacturing led the recent economic recovery as factories hummed in response to stockpile replenishment and greater demand for exports.
“August represents the 13th consecutive month of growth in U.S. manufacturing,” said Norbert J. Ore, chairman of the Institute of Supply Management’s manufacturing business survey committee.