Manufacturing growth expanded for August, according to an Institute for Supply Management report released today.
After July's index reading clocked in at 55.4%, August's index registered a 0.3-point gain to 55.7%. Based on surveys of purchasing managers, a reading above 50% indicates that the manufacturing economy is generally expanding, while below 50% indicates that it is generally contracting.
Market analysts proved far off the mark, having expected contraction in August with a reading of 53.8%. A Markit manufacturing report released today showed manufacturing growth in August, but at a slower pace than the previous month.
On a component-by-component basis, new orders shot up 4.9 points to 63.2 (the highest level in more than two years). The price index rose five points to 54, indicating that overall raw materials prices increased month-to-month.
Some components point to businesses being still hesitant to invest. Production growth slowed 2.6 points to 62.4, while employment eased off 1.1 points to 53.3. Both inventories and backlogs continued to shrink in August, but at a slower rate than before.
Fifteen of the 18 reporting manufacturing industries reported growth, with textiles, wood products, and electrical equipment leading the improvement. Meanwhile, "miscellaneous manufacturing," which includes products such as medical equipment and supplies, jewelry, sporting goods, toys, and office supplies, was the only industry to report growth contraction .
-- Material from The Associated Press was used in this report.