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U.S. Manufacturing Shows First Sign of Growth in 18 Months

September 1, 2009

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The manufacturing industry has started to show improvement for the first time in 18 months
, according to several indicators released by the Institute of Supply Management. In a national report that contains August data, ISM found that 11 of the 18 manufacturing industries reported growth from July to August.

According to the report, ISM's index for measuring the economic health of the manufacturing sector rose to 52.9 percent, the highest it's been since June 2007. This is also the first time since January 2008 the index has reached above 50 percent. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

"While this is certainly a positive occurrence, we have to keep in mind that it is the beginning of a new cycle and that all industries are not yet participating in the growth," said Norbert Ore, chair of the ISM Manufacturing Business Survey Committee.

The institute attributes the boost mainly to the strength of the New Orders Index, which was up 9.6 percent to 64.9 percent, the highest since December 2004.

When ISM's index is above 41.2 percent, over a period of time, this generally means the overall economy is growing. According to ISM's data, the overall economy has seen growth for the last four months.

ISM's Production Index rose 4 percent to 61.9 percent in August, versus July's reading of 57.9 percent.

The 11 industries showing growth in August include textile mills; apparel, leather and allied products; paper products; miscellaneous manufacturing; printing and related support activities; computer and electronic products; transportation equipment; nonmetallic mineral products; electrical equipment, appliances and components; fabricated metal products; and chemical products.

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