Manufacturing expanded at a faster rate in August, helped by employment gains, the Institute for Supply Management said in a monthly report.
The Tempe, AZ-based group said its PMI, which measures economic activity in manufacturing, advanced to 58.8% last month from 56.3% in July. The August PMI was the highest since April 2011. August was the 12th consecutive month of growth.
“It was a really, really strong number,” Timothy Fiore, chair of ISM’s Manufacturing Business Survey Committee, said on a conference call.
“There’s a constraint on labor,” Fiore said. “We need more qualified labor.”
The results reflected a turnaround from a year earlier, Fiore said. August 2016 was the last month the PMI indicated manufacturing contraction. “This year, we’re seeing a significant expansion,” he said.
ISM said 14 of 18 industries reported economic expansion, including petroleum and coal products, machinery, transportation equipment and fabricated metal products. Three sectors reported contraction, including primary metals.
The ISM report is based on a survey of 350 purchasing and supply executives. A reading above 50% indicates expansion and below 50% contraction. The PMI has averaged 55.4% the past 12 months and 56.7% for the first eight months of 2017.
The group’s Employment Index surged to 59.9% in August, from 55.2% the month before. Thirteen industries reported job gains, including machinery, transportation equipment, petroleum and coal products and fabricated metal products. Two sectors — apparel and primary metals — reported job cuts.
The ISM report was in sync with the monthly jobs report issued earlier today by the US Bureau of Labor Statistics. The agency reported that manufacturing added 36,000 jobs last month. Makers of durable goods added 28,000 jobs.
ISM’s New Orders and Production indexes remained strong in August.
The New Orders Index cooled slightly to 60.3% last month, from 60.4% in July. The Production Index rose to 61% from 60.6%.
ISM expects September to remain robust but that manufacturing will see an impact from Hurricane Harvey. The massive storm late last month caused massive flooding in Houston and the Gulf Coast region, spurring shutdowns of oil refineries and chemical plants.