Manufacturing activity accelerates in August

Defies predictions of further slowing

Economic activity has slowed markedly in recent weeks, and most economists had forecast that a key survey of manufacturing would reflect a continued deceleration.

However, the ISM Manufacturing Index, which looks at manufacturing conditions around the nation, increased from 55.5 in July to 56.3 in August, indicating an acceleration in activity and easily topping the consensus forecast by Bloomberg of 53.0.

A reading of 50 suggests neither expansion nor contraction.

Modest growth in exports aided the industrial sector, as production continued at a robust pace, rising 2.9 points to 59.9, while hiring among the nation’s manufacturers accelerated from 58.6 to a healthy 60.4. Notably, manufacturing has been among the few industry groups in the private sector that have been adding employees at a solid pace.

Not all remained rosy, however, as new orders (53.1 in August vs. 53.5 in July) are still rising but remain in a downward trend, which is a sign that manufacturing growth may moderate in the coming months.

Still, the overall acceleration in manufacturing is welcome given the weak economic news that has been part of the landscape for much of August.